Crop prices rise

As the market went through a couple of weeks of choppy and mostly downward sessions, shares of fertilizers companies such as POT, MOS, CF seems to have navigated it quite smoothly these few days. One of the key reasons is prices of crops such as corn, wheat, soy bean have resumed upward trend again after participating the commodity sell-off in the last couple of weeks. The much talked about planting delays in North America since April has finally taken a toll on crop futures prices.

From Agriculture.com,

Time is running short for John Brink to plant his corn crop.


The southern Illinois farmer had put just about 7% of the crop in the ground as of Friday following weeks of delays due to rain. This is a sharp contrast from typical years, when he would normally have finished planting already.

"We are way behind," he said via cellphone from one of his fields.
Farmers across the Midwest have similar stories. Wet weather has kept them out of their fields and pushed corn prices back near all-time highs set last month.

The clock is clicking. If the weather is not clearing up soon, farmers may have to give up planting this season altogether. Corn futures price July contract is on its way to break historic high. Again. Shares of fertilizer companies, farming machinery companies are almost in tandem with crop prices , especially corn prices, in the last few months. Although my conjecture is that the broader market may face a bumpy road into the summer, and most likely a downward one, shares of agricultre-related companies can find some support in strong crop prices, albeit with increased volatility.

To see relationships between crop prices and fertilizer companies, please see related posts:
3 cases for POT

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Disclosure: The blog author does not own any of the above mentioned positions in her personal account as of May 26, 2011.