Summary

• Nearly 50% of all seaborne traded urea and roughly 25% of globally traded ammonia pass through the Strait of Hormuz, representing a position of considerable importance in the global fertilizer trade.
• Urea, whose seaborne trade routes were hit hardest by the closure of the Strait, surged 70%, while phosphate fertilizer rose 13% and potash declined 2% over the same period.
• The USDA now rates only 35% of this year's winter wheat crop as being in "good" condition, down from 47% a year ago, following the third driest period on record.
• The resulting disruption to global fertilizer supply has led Goehring & Rozencwajg to begin reaccumulating positions in fertilizer equities, which could perform well should grain prices emerge from their bear market.
• We believe the prudent course today is to establish only partial positions, with the intention of adding more aggressively should the El Niño arrive later than expected.

1.39K Followers