USD | 10% P.A. GUARANTEED COUPON | LOW STRIKE 85% | MONTHLY KO OBSERVATIONS
The Mosaic Company
Mosaic is one of the world's leading producers and marketers of concentrated phosphate and potash crop nutrients.
Fertilizer prices are currently trading at record highs. Historically, when fertilizer prices have gone up, Mosaic’s share has followed with the same trajectory. However, Mosaic’s share
price presently remains well below levels reached in previous commodity bull markets. We believe fertilizer prices will remain high, and Mosaic’s share price is going to play catch up.
Constrained supply to keep prices high. China, the world’s largest producer of phosphate, a key component in fertilizer, has banned phosphate exports until at least June of next year. Russia has also announced plans to impose export quotas on nitrogen fertilizers to ensure domestic supplies and contain price inflation. The move could further support surging fertilizer prices worldwide and tighten global fertilizer markets already searching for supply.
Natural gas remains relatively cheap in North America, giving Mosaic a big advantage. Ammonia is produced from nitrogen. The major feedstock for nitrogen production is natural gas. Natural gas prices have gone up in North America but prices have not skyrocketed as they have done in Europe and Asia. Consequently, Mosaic’s EBITDA is expected to more than double this year. At the strike price, Mosaic would trade at an attractive 35%upside to consensus target price.