Buying fertiliser when it smells

In August 2020, the price of Wheat was $5.50 per bushel).

By early March 2022 (Ukrainian invasion), the price of Wheat had doubled to $11.00.

During the same period, the share price of Mosiac has quadrupled from $17 to $68.

This is a story of correlation and the operational leverage that equities can provide.

It’s also a story about identifying extremes especially at the peaks and respecting mean reversion, particularly following frenzied parabolic price moves.

Now, the price of Wheat and Mosiac Company (one of the world’s largest fertiliser companies) are both trading below pre-Ukraine invasion levels.

Today, I am queuing for Oversold extremes in soft commodities and related sector equities.

January 6, 2023

by Rob Zdravevski

rob@karriasset.com.au