Week 51: Fertilizer Industry
The investment idea of the week is based on 3 very promising companies of the fertilizer industry. The global population will increase from 7.6 billion at present to 9.7 billion in 2050. Simultaneously the demand for meat is increasing especially in the emerging markets. A lot of agricultural land is needed to provide the animals with nutrition in order to ensure the meat production. Due to the climate change the quantity of extreme weather conditions will rise. Crop failures have to be managed. The demand for innovative fertilizers to guarantee the efficient use of agricultural land will further increase. If India will continue to liberalize the market (as expected from insiders) for phosphate based products the needs will shoot up.
After the acquisition of Monsanto Bayer was penalized too much (-43%). Especially for the current share price it is an interesting investment. Restructuring measures and the general negative financial market put the share price of BASF under pressure (-37%). The more efficient value chains will have a positive impact for future business activities. The American producer of phosphate- and potash fertilizers Mosaic could resist the negative financial market trend (+25%). A correction of -20% during the last 2 weeks results in a promising entry level. The enormous phosphate capacities will help to have positive impacts of the droughts during the last months.
