Commodities have been rising across the board. Since bottoming in late February, the Reuters/Jefferies CRB Index, a widely used gauge of prices for almost two dozen commodities, has rallied almost 30 percent – helping to fuel a rally in energy and material stocks. There are several reasons why this rally is one of the strongest on record. Materials have reacted to the re-emergence of growth in developing economies around the world; their appeal as a hedge against a weakening dollar has contributed strongly to the ongoing demand.
We don’t want one important commodity, fertilizer, that’s not part of the CRB Index, to be overlooked. Shares of fertilizer producers, including Growth Portfolio members Potash Corp. of Saskatchewan (POT) and Mosaic (MOS), have rallied sharply, up 100 percent and 135 percent from their lows, respectively.
The stocks have shown strength despite weak near-term fertilizer demand and low production volumes. With grain prices under pressure, given the global economic environment, farmers have seen their profits shrink. This forced them not only to cut their budgets for heavy farm equipment, but for crop feedstocks as well.
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