AUS
NZ
UK
CA
USA
IND
Highlights
- Fertiliser prices have seen a significant increase since Russia invaded Ukraine. Sanctions on Russia led to supply concerns as it is the second-largest supplier of potash.
- Prices of key raw materials like potash, nitrogen, urea, sulphates and ammonia used in the making of crop nutrients have shot up by nearly 30% in 2022.
Fertiliser prices that have already been on an upward trajectory surged to a record high after Russia invaded Ukraine. Russia is the second-largest supplier of potash, which is used as crop fertiliser. Although the sanctions were not imposed on Russian fertiliser companies, most of the supplies move through ports situated in war conflict regions of Ukraine. In addition, some western countries imposed sanctions on Belarus, which is the third-largest producer of potash, for helping Russian troops in the war.
Prices of fertilisers in the global market have reached a record high level in the last few months because of multiple factors that have occurred almost simultaneously. Prices of essential raw materials like potash, nitrogen, urea, sulphates, ammonia used in the making of crop nutrients have shot up by nearly 30% in 2022 and are currently at the highest levels since 2008, mainly due to the Russia-Ukraine war.
Besides the ongoing conflict between Russia & Ukraine, which led to price rise, China also reduced the export of fertiliser like phosphate and nitrogen to the world market to limit the rise of food prices in the domestic market, which triggered further price rise in the international market.
© 2022 Kalkine Media®
Image description: 3 fertiliser stocks to invest
The surge in fertiliser prices might not be good for the economy, but it is a positive trigger for fertiliser stocks operating in the UK stock market. Let us look at 3 FTSE listed fertiliser related stocks and their investment prospects:
Harvest Minerals Ltd (LON: HMI)
The company is engaged in the exploration and production of organic fertiliser. Its principal project is located in Brazil, where it has an exploration license for potash projects.
Harvest Minerals witnessed a significant sales rise in 2021 for its multi-nutrient fertiliser, KP Fértil® that is essential for maintaining soil health and improving production. The company has accumulated a sales order of 30,161 tonnes as of 28 February 2022, representing 20% of the sales target of FY2022. As a result of increased demand for its products, the company plans to ramp up its production capacity to 200,000 tonnes.
Harvest Minerals Ltd’s current market cap stands at £24.40 million as of 22 March 2022. The stock has given a 355% return to its shareholders in the last one year.
Emmerson Plc (LON: EML)
FTSE AIM-listed company is engaged in the development of potash projects. Its flagship project is a 100% owned Khemisset potash project located in Northern Morocco.
Emmerson’s potash project is currently in the development stage and is expected to achieve its first production by early 2024. The consistent rise in the global potash prices in 2021, which are already above the price estimated during the project feasibility study, could create value for the company once the Khemisset potash project is fully operational.
Emmerson Plc’s current market cap stands at £64.08 million as of 22 March 2022. The stock has given a 23% return to its shareholders in the last one year.
Plant Health Care Plc (LON:PHC)
The company offers various biological products that help improve crop yield and strengthen crop defence against bacteria and insects.
Plant Health Care has operations in America and Mexico. For the 12 months ended 31 December 2021, the company reported a 28% rise in revenue to USD 8.4 million driven by positive sales growth in different products. The gross margin expanded by 300 basis points to 59% during the period.
Plant Health Care Plc’s current market cap stands at £31.46 million as of 22 March 2022.
Note: The above content constitutes a very preliminary observation or view based on market trends and is of limited scope without any in-depth fundamental valuation or technical analysis. Any interest in stocks or sectors should be thoroughly evaluated taking into consideration the associated risks.
