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10 Best Fertilizer Stocks to Buy According to Hedge Funds

Fatima Farooq
Updated 11 min read

In This Article:

In this article, we will be taking a look at the 10 best fertilizer stocks to buy according to hedge funds. To see more of these stocks, you can go directly to see the 5 Best Fertilizer Stocks to Buy According to Hedge Funds.

In 2022, global fertilizer prices had hiked to near-record levels, which spelled trouble for crop production in 2022 and even in 2023. With the Russian invasion of Ukraine, the limited and expensive supply of fertilizers was damaged further, resulting in shortage concerns through 2022 and well into 2023 as well. Such concerns are unsubstantiated, considering the fact that Russia is the world's largest supplier of fertilizers. The country accounts for about 45% of the global ammonia nitrate market and 18% of the potash market, for instance. As a result, the global community is heavily reliant on Russian fertilizer products, a reliance they are attempting to let go of in light of the Russo-Ukrainian conflict.

Fertilizer Market Situation in 2023

According to the United States Foreign Agricultural Service, the US was able to avoid the surge in fertilizer prices in the aftermath of the Russian invasion because it had purchased most of its fertilizers from the country in 2021. However, this was expected to provide only temporary relief since the conflict is still ongoing. Despite this bleak outlook, the situation today has moderately improved. According to the World Bank's Food Security Update from March 23, fertilizer prices fell from their 2022 peaks this March because of shifting supplies and trade linkages. Countries that had been heavily reliant on Russia before the invasion of Ukraine managed to find alternative sources for their fertilizer imports. For example, Brazil began increasing its potash imports from Canada, while Morocco began sourcing ammonia from Egypt and Saudi Arabia.

The US is also taking steps to increase American-made fertilizer production in 2023. The United States Department of Agriculture (USDA) announced a $29 million grant offer in March, which was focused on projects aimed at increasing American fertilizer production. Such a move is bound to bring American fertilizer companies like Archer Daniels Midland Company (NYSE:ADM) and The Mosaic Company (NYSE:MOS) on par with Canadian fertilizer companies like Nutrien Ltd. (NYSE:NTR), which are benefitting from increased supply demands. This grant is the first in an expected series of grants from the $3 billion fund the USDA currently holds for the promotion of innovative domestic fertilizer production capacity.

Impact of US Grants on American Fertilizer Companies

Several examples of American fertilizer producers demonstrate how the above-mentioned grants are already beginning to help US-based companies. Pursell Agri-Tech LLC, a manufacturer of controlled-release fertilizer (CRF) based in Alabama, has been offered $4.9 million to assist the company with working capital and to increase its inventory by 40,000 tons per year. Palindromes Inc., based in Missouri, has also been offered $4.9 million to expand its use of anaerobic digestion and renewable energy in the production, processing, and sale of climate-smart fertilizer. Finally, Perfect Blend LLC, based in Washington, has been offered $2.6 million to help the company expand its manufacturing and processing of raw manure and fish waste into fertilizer by using the company's patented technology. The examples of these companies show the on-ground impact of the US government's steps to increase domestic fertilizer production at a time when the fertilizer market is vulnerable.

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