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

Sowing too many Oats

This weekly price chart of Oats tells me its set up is looking good for a low around the $3.94 mark in the coming 2-3 weeks.

A further decline of 10% is sympathetic to the trajectory of other ‘softs’ such as Rice, Wheat, Corn and Soybeans.

I think Cotton and Coffee have substantially more to downside than others. More on that in a future note.

The price of Oats nearly trebled through 2020- 2021 and then stayed elevated for 6 months.

However, this is a story about;

  • not chasing prices which are at extreme percentages above whatever mean you choose to obey;
  • observing euphoria and not running with the herd;
  • if you did, take the ‘fat part of the trade’ and;
  • allow for the probability of mean reversion.

Furthermore, farmers would have been well advised that an extreme run in price is often short-lived before considering crop rotation,

as would have buyers of agricultural land.

It was a sellers market.

When we combine an increase in inventories and higher fertiliser prices amidst a mid-cycle slowdown, prices are now declining towards the other end of the pendulum.

Canada is the world’s largest exporter of Oats, Russia is the largest grower whilst the U.S. and Germany account for 50% of the global Oats import market. Oats yield 50% more per acre than Wheat.

Lower Oats prices will benefit the likes of Kelloggs, Hain Celestial & Nestle.

Those ‘middle-men’ who have built up inventories will soon (next 6 months) be seen selling at a discount or loss.

It will soon be a buyers market.

July 13, 2022

by Rob Zdravevski

Pasta consumption still growing

Lately, I’ve been writing about the price of wheat, which prompted a review of a post I wrote in 2012 where I discuss one of my favourite uses of (durum) wheat, being Pasta.

In the original 2012 post I was willing Great Britain to lift its consumption game.

The source of the figures below is from possibly one of the world’s most important organisations, being the International Pasta Organisation. Watch out OPEC…..


Here is a list of the average amount of kilograms of pasta each resident in the following country consumed in 2011

Italy 26.0 kg 

Venezuela 13.0 kg

Tunisia 11.9 kg
Greece 10.4 kg

USA 8.8 kg
Chile 8.4 kg

France 8.0 kg
Germany 7.9 kg
Argentina 7.2 kg

Iran 7.0 kg

Portugal 6.6 kg

Turkey 6.4 kg
Brazil 6.4 kg

Czech Republic  6.0 kg
U.K. 2.5 kg

Then. in 2019, they consumed…..

Italy 23.1 kg 

Tunisia 17 kg

Venezuela 12 kg

Greece 11.4 kg

Chile 9.5 kg

USA 9 kg
Argentina 8.7 kg

Turkey 8.6 kg

Iran 8.7 kg

France 8.1 kg

Germany 7.7 kg

Portugal 6.5 kg

Czech Republic  6.5 kg

Brazil 5.8 kg

U.K. 3.5 kg

Surprisingly, Italian and Brazilian consumption declined through the decade.

Argentine and Turkish consumption increased handsomely, while Tunisians and Brits ate 40% more pasta on a per capital basis.

Incidentally, the largest pasta consumption market is the United States at 2.7 million tons, followed by Italy at 1.4 million tons and then Brazil is third at 1.2 million tons.

Overall, total global pasta production has grown from 12.5 million tons in 2011 to 16 million in 2019.

I wonder if many Italians emigrated to Argentina over that time to account for the decline in Italy and an increase in Argentina ??

January 7, 2021

by Rob Zdravevski

Kneading the dough

Lock in your Wheat price.

Yesterdays outside bearish reversal aides my Short Call on Wheat.

Currently trading at $8.50 on CBOT,

Looking for an initial downside target into the $7.81-$7.67 range.

$7.75 to be specific.

The medium term target surrounds the $7.12 area.

November 25, 2021

by Rob Zdravevski


‘Fat Part’ of Wheat’s short has been seen

Wheat has retraced 78.6% of the advance from December 2020.

It’s nearly oversold, it may have a little further, down to the trend line at $6.10 but the ‘fat part’ of the short trade has been had.

On a weekly basis, other technicals suggest similar metrics, coincidences of touching a 50 Week Moving Average, reaching 2.5 standard deviations below its mean and other exhaustions.

Away from technicals, supply fundamentals seem favourable for higher prices again.

July 12, 2021

by Rob Zdravevski

Quick Look at Wheat

A quick look at the price action in Wheat

%d bloggers like this: