Nutrien - Fertilizer Plays Into Growing Season, But a Coinflip2022's droughts and the Ukraine War put a lot of the world's food supply into question. Food commodity futures had a pretty bullish year. Since we're in mid-February and Western Hemisphere growing season is right upon us, fertilizer stocks are really worth paying attention to.
Food scarcity is an even bigger issue with the Wuhan Pneumonia pandemic smashing Xi Jinping and his Chinese Communist Party over in Mainland China. The Party claims less than a hundred thousand people have died from COVID since this all began.
But the Party is obviously lying about that, since China had 1.4 billion people and was the epicenter of the virus. America is on the other side of the ocean and lost 1.1+ million people.
My point is that if China has really lost, say, 40 or 50 or 100 million people to the pandemic, the Party will need to import crops because there won't be all that many farmers around anymore to do the work of feeding the regime.
This should be a bullish situation for food commodities and fertilizer.
Nutrien is one of the market leaders, but this is a really difficult setup, a lot like flipping a coin, and here's why.
1. A monthly microgap at $64 that the algorithm spent a lot of effort keeping lows away from
2. Already a 40%+ retrace, but new lows haven't been set.
3. Daily bars show a perfect continuation of the downtrend line
4. Weekly bars show a sweep of the downtrend line
5. Earnings is Feb. 15
So, here's what I think at the moment. It's something of a gamble, but I think you can generate Alpha with puts on Nutrien before earnings. I say this, but realize that "generating Alpha" doesn't buy rice at the grocery store. It's like Sklansky Bucks in poker. Cool, you got +EV, but the donk took all your money. At least you can post a bad beat, I guess.
In this case I think the play is not as unrealistic.
Another fertilizer giant, CF Holdings, has earnings the same day: Feb. 15 postmarket, and started doing the bearish "orderblocking" thing two sessions ago
These patterns before earnings are generally (emphasis on generally ) harbingers of a big gap down coming. The logic being that sell orders are being filled in anticipation of what smart money's big data analysis has already very accurately determined is about to happen
Monday you get an FOMC member jawboning and Tuesday we get the dreaded CPI printout. It's a lot of volatility confluencing together in one big coagulate and if you guess right you win a cookie and if you guess wrong Wall Street guys will pay stripers with your money at 11:00 PM happy hour.
In Nutrien's Q3 '22 financials the company told investors that they expected demand to be hot going into _fall_, and not spring, "Weather has been favorable in North America and we anticipate that the rapid pace of harvest will support strong fall ammonia demand and normal application rates of potash, phosphate and crop protection products."
They also said, "We have lowered our global potash shipment forecast to between 60 and 62 million tonnes in 2022, largely due to the impact of higher-than-expected inventory and cautious buying in North America and Brazil during the second half of 2022."
These two factors contrast against expectations from the company that expectations of higher 2023 commodity prices will lead to an increase in farm production, while noting that Ukraine will be down some 45% because of the war, notable because they were pretty much the world's wheat kings.
Also noteworthy is Q3 was a big revenue/EPS miss for Nutrien. Estimates were 3.85 EPS and came in at $2.49. Revenue was $8.53B and came in at $7.91B.
Q4 is a lot easier of a goalpost to hit, with estimates at $2.534 EPS and $7.392 Revenue. A miss here would (logically) definitely be a dumpster.
So, ultimately, I think $110 Nutrien will come, and we may very well see this in the later part of '23, if not the early part of '24.
But before then, it seems that the $60s are imminent.
So, I'd rather do puts on CF than Nutrien into earnings as it stands, but staying flat and playing the consequences is a lot less risk.
The two areas to watch for on Nutrien:
1. $63 to buy
2. $110 to sell
It would be a big, bullish deal if Nutrien doesn't break this daily trendline and just dumps on earnings. $65 commons prices and 3-6+ month expiry call options should definitely be a fat return if you can ride it to the top.
Nutrien
NTR Weekly UpdatePosted a while back on NTR , long idea with JUN 80 calls following a whale buyer.
This stock continues to grind higher and beautiful chart IMO with healthy consolidation periods before each continuous move higher.
I'm bullish as long as she holds the 20MA (black line)
Will be looking to take some profits at target 85$ by rolling out the $80 calls to a higher strike.
Nice volume recently leads my bias to more upside , great EPS growth and great recent ER especially in a weaker market, great strength !
Blue skies you gotta buy :)
Rising agricultural prices bode well for NutrienWith prices for corn futures, wheat and soybeans on fire, the prospects for fertilizer companies like Nutrien have never been better. The stock trades at only 1.4x book value and pays a 3.5% dividend yield. Earnings surprises (like the prior two quarters) are likely to continue.
Fertilizer Stocks look ready to bottom and Nutrien best pick.The promise of better weather this growing season (Farmer's Almanac) than terrible 2019, Locusts in Africa destroying crops and possible higher demand in China for agricultural products should improve sales for nutrients. Canada has the 2nd largest reserves of Potash in the world, and is the leader in terms of global production. One advantage for the price of potassium chloride is the fact that more than one producer has curtailed production of late. Low natural gas prices an advantage for Nutrien in Canada when it comes to Nitrogen fertilizer. They also have large retail network worldwide. At a P/E of 16X trailing earnings, a 4% dividend yield and substantial free cash flow, the stock seems good value here.
SQM BUYBuy signal at 30.25 $
Timeframe - 1 week.
Sociedad Quimica y Minera de Chile S.A. (SQM), is a producer of potassium nitrate and iodine. The Company produces specialty plant nutrients, iodine derivatives, lithium and its derivatives, potassium chloride, potassium sulfate and certain industrial chemicals.
It's interesting for me due to mining of Lithium. Which is used to create batteries.
If you want to see more history of this strategy, I will able to show you if you request me.
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NTR, Mother Nature Vs. PotashTSX:NTR
Weekly
Rough 2019 for Potash and hence Nutrien
Downtrend in RSI & Price for most of 2019 and touching support
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Nutrien's 2020 guidance is positive, but I am skeptical because....
Unpredictable weather is starting to become common and in 2019 it was
For example, corn farmers in the US farm belt received so much rain, it greatly affected their yield
USA - China trade war (might be resolved soon, maybe)
China building up inventory supply at tide water to get more leverage in contract negotiation
Potash Production Tax Credit cut in 2019 by the Saskatchewan government
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However, in the medium to long term people need to eat and with millions of people being lifted out of poverty and into better circumstances, demand for potash will be there
Will be adding on further weakness
Nutrien see what happens on the trend line (need more info)Agrium and Potash Corp merger; savings (selling lithium assets in chile)
promised a 3,5% dividend
Potash at low price $230 ton which will rise over time with the worlds population growth
Could be one to happily take the dividend and acquire more if price goes down.
Could benefit from a falling dollar)
And that commodity prices rise at the end of a business cycle