![]() Notably, potash consumption is expected to fall to 3M tons through March 2023, compared to 5M tons in the previous year. ![]() Therefore, farmers have resorted to using " less of it to grow crops like rice, wheat and sugar." Bloombergįurthermore, India was also cited as importing less potash as farmers couldn't cope with the high prices in the market. Farmers are able to skip application of phosphate fertilizers without compromising yields since the soil can retain this nutrient for more than a year. With prices at record levels, farmers decided to reduce applications to protect their margins. However, we are less concerned with the transitory impact, as no significant damage was done to Mosaic's production facilities, and the delayed shipments could be moved to Q4.īut, we are increasingly concerned with whether the market had adequately priced in further demand destruction across all its business segments as the world moves closer to a global recession.įor instance, Bloomberg reported in a recent commentary that "Brazil has so much fertilizer that shipments are getting turned away." Notably, the high prices in the market have forced farmers to apply lesser phosphate fertilizers to mitigate the impact on their margins. Mosaic's phosphates sales volume was cut further to 1.6M-1.65M tons from its initial Q3 guidance of 1.7M-2M tons due to the recent Hurricane Ian disruption. Don't Ignore Demand Destruction Due To Unsustainable Prices As such, investors can consider waiting for price action signals indicating the failure of the current relief rally before cutting exposure further.Īccordingly, we reiterate our Hold rating on MOS. Notwithstanding, the selloff through September has created a near-term bottom for MOS. Therefore, we assess that MOS will likely find significant selling resistance trying to navigate its way above August highs as its growth continues to normalize. While it's still expected to be well above its historical average, we believe it could put further pressure on MOS to move much higher from here. Mosaic's revenue and profitability growth is projected to fall further through FY24 as the underlying demand/supply imbalances normalize further. ![]() It also had to deal with market volatility that saw MOS fall more than 25% from its August highs to its recent September lows.Ĭoupled with the threat of further demand destruction due to high fertilizer prices, we believe investors need to be wary about buying the recent dip. and Mosaic wasn't one of them! That's right - they think these 10 stocks are even better buys.The Mosaic Company ( NYSE: MOS) has had a tumultuous few weeks as it had to deal with the potential disruptions from Hurricane Ian, which is expected to impact phosphates production through Q4. They just revealed what they believe are the ten best stocks for investors to buy right now. After all, the newsletter they have run for over a decade, Motley Fool Stock Advisor, has tripled the market.* When our award-winning analyst team has a stock tip, it can pay to listen. At 14.5 times trailing earnings, and a forward P/E ratio of less than half that, there's still plenty of room to run in Mosaic stock - and today's sell-off looks like a buying opportunity. ![]() Is Mosaic stock a good bargain, though, after a 35% increase in its stock price, but a potential 100% or better increase in revenue from the products it sells? Despite today's decline, shares of Mosaic are still up roughly 35% since late February. The other thing to keep in mind, of course, is the skyrocketing price of Mosaic's own stock. Potash prices up nearly double in the space of one month is going to make Mosaic tremendously profitable in the short term - where "short" is defined as "for as long as sanctions continue" - and I suspect that's going to be a long time, regardless of how the peace talks progress. The skyrocketing cost of fertilizer is one thing investors should focus on today. ![]()
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