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Strategies & Market Trends : Value Investing -- Ignore unavailable to you. Want to Upgrade?

To: Paul Senior who wrote (59702)	8/12/2017 10:52:38 AM
From: E_K_S	Read Replies (1) \| Respond to of 78748

RE: Fertilizer Stocks - The multi year down cycle on end user price continues . . CF’s price realization - While CF Industries’ ( CF) shipments rose in 2Q17, as we discussed in the earlier part of this series, price realizations continued to disappoint. This was pretty much the case for other players ( MXI) including PotashCorp ( POT), CVR Partners ( UAN), and Terra Nitrogen ( TNH). Let’s look at how each of CF’s segment’s realized prices performed during 2Q17. (Note: at prices below $200/ton very few of the companies can squeeze out a profit; Ammonia price below $300/ton is just not profitable but covers some of their fixed costs) 2Q17 prices In 2Q17, CF Industries’ price realization suffered in four of its five segments. The Ammonia segment saw its realized prices fall the most compared to the other segments by as much as 18% year-over-year to $338 per metric ton and $411 per metric ton in 2Q16. Next up was the Granular Urea segment, which saw its prices fall ~14% year-over-year to $212 per metric ton from $247 per metric ton in 2Q16. UAN (Urea Ammonium Nitrate) prices also fell 13% year-over-year to $175 per metric ton from $202 per metric ton a year ago in 2Q16. The Other Nitrogen Products segment’s realized prices also took a hit during the 2Q17 quarter. They fell ~12% year-over-year to $155 per metric ton from $177 per metric ton in 2Q16. On the other hand, the AN (ammonium nitrate) segment saw its realized prices rise 5% year-over-year to $208 per metric ton from $199 per metric ton a year ago. -------------------------------------------------------------- End commodity fertilizer prices continue to bounce off multi year lows trying to put in a 7 year super cycle low (looks like 12 years peak to low and we are still at lows!). The linked report above is 6 pages that describes an ugly business so I want to own the companies that can survive in this environment and own the best assets (newest technology and maintained w/ CapX investments even during the bad times). I monitor this link - Agricultural Fertilizers - for possible positive/changing trends. FWIW, I continue to harvest my losses in this sector and after 31 days re-buy to establish a lower cost basis and look for some turnaround in 3-5 years. As FCF rises, dividends s/d be reinstated again and eventually higher prices will follow. I do however, keep the total basket of fertilizer stocks small about 1% of the portfolio. EKS