Editor's Note: Today's essay is special. We will reveal a group of companies we're monitoring and make our research available to you without paying for Premium. |
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My father never talked about money at the dinner table. I suspect since we didn't have any, it didn't really come up as a topic of conversation. |
As first-generation Americans and lower-middle-class, we tried doing everything the "financial experts" told us to do. Work hard, diversify, buy index funds, and trust the experts. |
But every month, the gap between what he earned and what things cost grew a little wider. |
I remember him talking about gas or grocery prices spiking and how the invisible forces controlling the price of everything seemed designed to keep people like us running in place. |
Those conversations taught me something no business school ever could. |
The system isn't built for people like us to win. Not unless we learn to see what the crowd refuses to look at. |
Which brings me to fertilizer. |
Not exactly cocktail party conversation. Nobody's posting about nitrogen prices on social media. Your brother-in-law isn't texting you hot tips about potash futures. |
That's precisely why I'm writing about it today. |
In January 2020, Iranian protestors flooded the streets of Tehran. |
The government diverted natural gas from fertilizer plants to heat homes. Urea production collapsed. Export contracts went unfulfilled. |
Most people never heard about it. |
But farmers in Brazil, India, and the American Midwest felt it immediately. Fertilizer prices spiked. Planting costs surged. |
The invisible thread connecting geopolitical chaos to the food on your table pulled tighter than most people realize. |
It's happening again. Right now. |
The Signals Are Flashing |
The global fertilizer sector is flashing signals I haven't seen since the early days of the commodity supercycle. |
Grain prices have collapsed to levels that make farming economically unsustainable. Farmer profits sit at cyclical lows. Sentiment is in the gutter. |
This is exactly the setup I look for. |
When an entire sector gets beaten down to the point where producers can't make money, supply contracts. |
When supply contracts, prices rise. It's simple economics. |
A closely followed industrial food index just broke out to a new two-year high, only 6% below its all-time peak from April 2022. |
The fertilizer companies within that index are driving nearly a third of the gains. |
Here's what makes this moment different from a typical cyclical bounce. |
The Affordability Crisis |
Picture a farmer in Iowa staring at his spreadsheet. |
The fertilizer-to-crop price ratio, how many bushels of corn he needs to sell to buy a pound of nitrogen, has hit unsustainable levels. For phosphate: 1.4 times the ten-year average. |
He's choosing between fertilizing his fields and paying his mortgage. |
This can't last, and it never does. |
Three consecutive weak years in global agriculture prices have compressed farm margins to the point where acreage cuts are inevitable. |
When crop prices rise, and they will, they always do after periods of sustained low prices. |
That's when fertilizer becomes affordable again. Demand snaps back. Companies that survived the drought get rewarded. |
Mother Nature Isn't Cooperating |
Global drought continues to deplete soil nutrients at an alarming rate. |
Brazil is drying out, and Southern Europe recorded a 50% drop in olive harvests. Half the olives in Spain simply didn't exist this year. |
Eastern Europe and the Black Sea region face intensifying soil-moisture deficits threatening winter grains. |
Roughly 40% of American winter wheat sits in drought conditions. |
The Great Plains are parched. When drought depletes soil, farmers need more fertilizer, not less, just to maintain yields. |
Last year's large harvest stripped phosphate and potash reserves from agricultural lands. |
Those nutrients must be replenished. No shortcut. No technological fix. No app for that. Just the basic chemistry of growing food. |
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Geopolitical Chaos Is Tightening Supply |
Remember that Iranian story from 2020? |
Iran accounts for roughly 11% of global urea trade, approximately 5 million tons annually. Recent social unrest has already elevated prices. |
Iranian urea production has been curtailed due to winter gas shortages and infrastructure damage from labor strikes. |
Last month, Iran failed to fill a 1.5-million-ton tender from India, managing to supply less than a million tons. |
U.S. urea prices in New Orleans jumped from $395-$415 per short ton to $417-$430 in a single week. |
International markets saw $10-$50 per metric ton increases across Brazil, Argentina, Mexico, Southeast Asia, and the Middle East. |
The market is pricing in current supply failures. |
I've spent my career looking for moments when the crowd is wrong. When consensus diverges from the underlying reality. When fear creates opportunity. |
This is one of those moments. |
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The Contrarian Bet Wall Street Doesn't Want You to See |
The fertilizer sector trades at valuations assuming the worst is permanent. |
But the worst is never permanent. Cycles turn. Supply adjusts. Patient capital gets rewarded. |
Yara International is positioned for the EU's Carbon Border Adjustment Mechanism, which favors low-carbon producers. |
They're pivoting toward low-emission ammonia and targeting $600 million in expanded free cash flow by 2030. The stock trades at 1.39 times book value and 7.1 times cash flow, which is well below peer averages of 9.9 times. |
Mosaic trades near its four-year low. They'll benefit from structural supply constraints limiting Chinese phosphate exports and have raised their cost-savings target to $250 million by the end of 2026. |
At 8.1 times cash flow and 0.7 times book value, the market is saying this company is worth more dead than alive. I disagree. |
Nutrien, the leading potash, phosphate, and nitrogen producer, benefits from the tight potash market expected through 2028. |
Potash shipments are on track for their fourth consecutive year of expansion, a trend not seen since 2005. It trades at 8.5 times cash flow and 1.38 times book value. |
CF Industries is the low-cost, largest producer of ammonia and nitrogen fertilizers in North America. Access to abundant natural gas gives them structural margin advantages over European and Asian competitors. |
At 5.8 times cash flow and 3.0 times book value, the market is practically giving this company away. |
The mainstream narrative says diversify, buy index funds, and trust the experts. |
But the experts missed the commodity supercycle. They missed gold's breakout. They missed Bitcoin's institutional adoption. |
They're missing this. |
The fertilizer sector represents the shift from financial assets to real assets. From digital promises to physical necessities. From what's popular to what's essential. |
You can't eat AI, and you definitely cannot feed eight billion people without fertilizer. |
What To Do Now |
Here's the actionable takeaway: start paying attention to the fertilizer sector. |
You don't need to bet the farm. Consider adding exposure to companies like Nutrien, Mosaic, CF Industries, or Yara International. Research the fundamentals yourself. |
If you're a Premium Member, we'll be publishing in-depth research into the companies we'll add to the Moonshot Minute Portfolio. |
The best time to buy is when nobody else wants to. |
When headlines are negative. When sentiment is bearish. When the crowd has moved on to shinier objects. |
That's now. |
This won't be a smooth ride. Contrarian bets never are. There will be volatility. Moments of doubt. Headlines that make you question the thesis. |
But the underlying math doesn't lie. Farmers need fertilizer. Soil needs nutrients. Supply constraints don't resolve themselves overnight. |
The question isn't whether fertilizer prices will recover. The question is whether you'll be positioned when they do. |
Wall Street wants you focused on the next AI breakthrough or crypto pump. Chasing momentum. Buying high. Selling low. Generating commissions on every trade. |
I want something different for you. |
I want you to see what they don't see. To position where they won't position. To build wealth the way it's actually built, which is by having the conviction to stand apart from it. |
My father never learned that lesson. He trusted the experts and followed the rules. |
Spent his whole life watching the gap between what he earned and what things cost grow a little wider. |
I'm not going to let that happen to my family, me, or my team. So we work hard every day so it doesn't happen to you. |
The fertilizer sector is a contrarian buy. The fundamentals support it, the technicals confirm it, and the geopolitical backdrop could accelerate it. |
Sometimes the best opportunities hide in plain sight, disguised as boring industries that don't make headlines. |
This is one of them. |
Double D |
P.S. Here's a screenshot of the current Moonshot Minute Portfolio. I've blurred out the tickers since that information is only for Premium Members, but you can see how we've done so far: |
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