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Strategies & Market Trends : Dividend investing for retirement
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To: the traveler who wrote (34130)9/9/2022 12:09:41 PM
From: Elroy1 Recommendation

Recommended By
the traveler

   of 34328
 
I think you will find that prices, although still very high, are already down from their peak price.

For the two main fertilizers that UAN makes (UAN32 and ammonia) the pricing is seasonal. So......it's most expensive in Q2 before spring planting season (when demand is highest), a least expensive now in Q3 (when there is zero fertilizer application, in Q3 there is just refill of depleted storage which was consumed in the Q2 planting season).

So it's expected that current fertilizer prices would be below the Q2 highs.

The INTERESTING thing is that the Q3 (low demand quarter of the year) 2022 realized prices are higher than the equivalent prices in Q3 2021. I take that to mean the the fertilizer multi-year price cycle remains on it's way up. Prices for Q3 2022 through Q2 2023 (the coming planting season) are definitely going to be higher than they were in the previous year's equivalent planting season.

So the thing to watch is where will fertilizer prices be a year from now, in Q3 2023? If they are higher than the current Q3 2022 fertilizer prices, that likely means that the multi-year fertilizer price cycle remains on it's way up. But we won't know that (the Q3 2023 fertillizer prices) for 12 months or so.

UAN is seriously undervalued if you agree with the above view to analyzing the fertilizer industry. It will likely pay more than $40 in calendar year 2023, and the fertilizer industry (and thus UAN's profitabillity, and the annual distribution amount) may still be on it's way upward to higher levels of manufacturer's profit, whereas the UAN units are priced as if fertilizer industry prices are going to soon collapse.

A stock in an improving business segment should not yield ~30%.
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