Mosaic (MOS US)

Reiterate BUY: Share price exhibit a strong uptrend


WEALTH FLASH -Mosaic 020322
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STOCK UPDATE

The shares of North American fertilizer company Mosaic (MOS US) have been trending higher since we recommended it on 8 Nov, 2021. However, they have rocketed higher over the past two days since it became apparent that the conflict is not going to end quickly. Russia and its ally Belarus are major exporters of potash, Mosaic’s most important product. Sanctions are going to limit Russian and Belarussian exports, which may prolong inflated potash prices.


OUR VIEW

Potash prices jumped as much as 30% in the past week. Russia and Belarus account for about 40% of global potash (potassium chloride) exports. Supplies of potash from these countries have been hampered as transportation routes from these countries have been cut off, as a result of US and EU sanctions imposed on Russia and its ally Belarus. 


Rising costs of natural gas in Europe are going to give North American producers of nitrogenous fertilizers an advantage over European competitors. Natural gas is used as a raw material/fuel for about 60% of nitrogen-based fertilizer production.


Soaring prices of agricultural commodities incentivize farmers to maximize fertilizer use. Russia and Ukraine account for about 29% of global wheat exports, 19% of world corn supplies and 80% of world sunflower oil exports, according to Successful Farming magazine. Prices of grain are moving higher on fears that if the war continues into planting season, a large part of the Ukrainian crop could be lost. War could also destroy Ukraine’s Black Sea export facilities.