The need for fertilizer and Potash One
June 22, 2009
Part 3 of 3: The need for fertilizer and Potash One
If you read the report that I wrote earlier you may have been struck by the numbers that I listed for the effect of fertilizer on crops as published from long term studies done at various universities in North America. With yields improving as much as 40 or 50% in some cases for corn and wheat it becomes pretty clear quickly how important it is to fertilize your crop. As the available arable land world wide, gets repeatedly abused to produce more and more feedstuffs, the need to fertilize will only become more critical. This fact isn’t going to go away, regardless of the climatic conditions that we encounter in the years to come.
As with Uranium there is only one jurisdiction literally in the world that I would trust to invest my money in the efficacy of developing a potash (fertilizer) deposit. There are very few choices currently available for this. That jurisdiction is Saskatchewan. A lovely agrarian province in what is geographically the center of Canada. They have currently the largest known deposits of potash in the world. They have been producing it on volume, more efficiently, and at a lower cost for longer, than anyone anywhere else. They also are friendlier to the development of both Uranium and potash than anywhere else in the world, at this time.
The choices are limited for good projects anywhere in the world, they are reduced to just two if you limit yourself to Saskatchewan. They are Athabasca Potash and Potash One.
I know which one I prefer. I could make the comparison here, but it frankly would be of no benefit to my business. What I can tell you is that now is the time to discuss all things agricultural. We are in the post seeding lull that I told you about a couple of weeks ago. We have only a few weeks (or less) to take the action to profit from what will be a very bullish move in not only the large potash companies (Potash Corp. Agrium, Mosaic etal) but the whole agricultural sector.
Talk to you soon with more updates,
Ritch Wigham
Mackie Research Capital Corporation (MRC) makes no representations whatsoever about any other website which you may access through this one. When you access a non-MRC website please understand that it is independent from MRC and that MRC has no control over the content on that website. The content, accuracy, opinions expressed, and other links provided by these resources are not investigated, verified, monitored, or endorsed by MRC.
The opinions, estimates and projections contained herein are those of the author as of the date hereof and are subject to change without notice and may not reflect those of Mackie Research Capital (”MRC”). The information and opinions contained herein have been compiled and derived from sources believed to be reliable, but no representation or warranty, expressed or implied, is made as to their accuracy or completeness. Neither the author nor MRC accepts liability whatsoever for any loss arising from any use of this report or its contents. Information may be available to MRC which is not reflected herein. This report is not to be construed as an offer to sell or a solicitation for an offer to buy any securities. Member CIPF.
What’s The Deal With Crude???
June 8, 2009
Part two of three:
As we talked, in the piece I did on crude, a couple of months ago, crude can and is a commodity that isn’t really a commodity at certain times. Now is one of those times.
As you may recall I suggested that crude would trade in a range of $42 – $50 dollars with a bias to the upside .My direction was right but I didn’t factor in my own rules on why crude isn’t a commodity and why it could go much higher. As it has.
The general rule in commodities is that fundamentals will ultimately decide the pricing structure of the supply and demand dynamic of the real marketplace. Well that ain’t CRUDE. I know it, and I even said it in the last article. Here is what crude is right now:
- A currency proxy.
- An alternate to gold ownership in lieu of inflation
- A bet on a recovery in the U.S.
- An interest rate hedge
- A political salve for the economies of the gulf states and Russia
Remember what you can’t have. You cannot have the collapse of the oil producers internal economies and have any chance for political stability. This right now is probably most important in Russia. If you had not noticed it has been very quiet from “The Bear” for the last while as crude has remained above $50.00. The Europeans who hold most of the Russian Oligarch’s paper , on the grossly over extended loans that hang out there are all much happier when you and I help make those nasty cash calls by paying up for crude while blaming OPEC for tightening supply.
As the U.S. dollar has declined against all major currencies (primarily the “other” reserve currency, the Euro) the price of Crude has worked higher. Remember crude is produced in the local currency and sold in dollars. Therefore the price must reflect the exchange rate of the seller’s conversion from their own on shore currency to the lousy U.S. dollars that they receive for their product. With the primary reason for current dollar weakness being the need for the U.S. Treasury to sell some 35 billion dollars worth of junk, almost no, real return bonds, every week ‘till the end of the year, to finance the “current” projected deficit in the U.S.
Below are two charts that reflect crude and the dollar index I wish I could overlay them, but I hope you get the idea. They are in essence the inverse of each other. Especially since mid-April.
So what does this all mean? Well we talked about all this actually before. Crude is a function of its price sustainability based on its impact on the economies of user vs. suppliers . So at what price does crude trade up to? Well I thought that $50 would satisfy both needs. I was wrong based on the need for a much cheaper U.S. dollar to attract money to the bond market. I believe that the new range for this is probably $55-$70. Once again with a bias to the upside. Above $70 everyone in North America really starts to hurt again and the excess supply that we really do have has a chance of influencing the market again. The world broke, it shattered, the last time it got above these levels. It hurt a bit@ $80, it stung @ $100 and it completely fell apart @ $140. This is a much more fragile world this time around and no-one wants this seeming recovery to reverse back to where we were last October. If the market works as it has in the past it will at some point trade up to where it hurts.
There are very good ways to deal with this. Let me show you.
Update: Follow this link for the next article in this series “The need for fertilizer and Potash One“.
Mackie Research Capital Corporation (MRC) makes no representations whatsoever about any other website which you may access through this one. When you access a non-MRC website please understand that it is independent from MRC and that MRC has no control over the content on that website. The content, accuracy, opinions expressed, and other links provided by these resources are not investigated, verified, monitored, or endorsed by MRC.
The opinions, estimates and projections contained herein are those of the author as of the date hereof and are subject to change without notice and may not reflect those of Mackie Research Capital (”MRC”). The information and opinions contained herein have been compiled and derived from sources believed to be reliable, but no representation or warranty, expressed or implied, is made as to their accuracy or completeness. Neither the author nor MRC accepts liability whatsoever for any loss arising from any use of this report or its contents. Information may be available to MRC which is not reflected herein. This report is not to be construed as an offer to sell or a solicitation for an offer to buy any securities. Member CIPF.
Agriculture: Questioning Crop Outcomes in ’09
June 3, 2009
Part 1 of 3
It is update time:
There are three key areas that I want to bring up from the discussions I have set forth recently:
- We need to talk seriously about agriculture now that the crop has finally been planted.
- The oil and gas sector and what is to come from here.
- Potash One, why this junior is on track for bigger and better.
Starting With the agricultural sector, we find that our concerns with this years crop outcome is being reflected in the market place already. Follow this link to see a related wheat chart.
As you can see from this chart of the “new crop” December wheat, we continue to have very strong price appreciation. This is also true for ‘beans and corn. I cannot strongly enough re-iterate my concerns with the eventual outcome of this years crop. If you use only a small percentage of your liquid assets in one speculative trade this year it should be in the Ag complex. So far it has been shaping up as I had feared with much cooler than normal weather in the growing areas and much wetter in some of the areas (Illinois) that are critical to the overall yield come harvest time. Suffice it to say that according to the latest USDA, NASS planting progress report of June 1st all of our primary food/feed crops(Wheat,corn,soybeans) are well behind their five year planting and germinating averages, with some areas quickly running out of the precious time it takes to either switch crops or to re-seed if that is necessary. This situation is not dissimilar to last year, but remember that it took near perfect growing conditions to fix the crop after the awe full start that it had. I am very skeptical that two perfect growing seasons in a row can be anticipated after the much worse than normal start that we have had again.
At this point the only real questions that remain for seeding is how much of the corn and wheat will be switched to soybeans. To me soybeans can very quickly become a default crop for a lot of growers as you can plant them later than corn, they don’t require the same levels of fertilization as wheat or corn and the tightness of supply that is going to be available from Argentina and Brazil seems to keep getting smaller, which has been what has caused a lot of the price support for the bean complex. The Chinese would normally have switched to import SA(South American) beans by now but appear to still have an import appetite for American beans.
All of which will probably result in a number of millions of acres being switched to beans from corn and wheat. Some estimates have this as high as three million acres. I look for any surprises hear to be on the side of the switch and could see this number even higher.
Look for part two tomorrow on the crude. (Update: Crude oil report now available.)
Mackie Research Capital Corporation (MRC) makes no representations whatsoever about any other website which you may access through this one. When you access a non-MRC website please understand that it is independent from MRC and that MRC has no control over the content on that website. The content, accuracy, opinions expressed, and other links provided by these resources are not investigated, verified, monitored, or endorsed by MRC.
The opinions, estimates and projections contained herein are those of the author as of the date hereof and are subject to change without notice and may not reflect those of Mackie Research Capital (”MRC”). The information and opinions contained herein have been compiled and derived from sources believed to be reliable, but no representation or warranty, expressed or implied, is made as to their accuracy or completeness. Neither the author nor MRC accepts liability whatsoever for any loss arising from any use of this report or its contents. Information may be available to MRC which is not reflected herein. This report is not to be construed as an offer to sell or a solicitation for an offer to buy any securities. Member CIPF.
Intersections Mining Report for June 1st 2009
June 1, 2009
Wayne Hewgill, one of our top mining analysts, just published the latest edition of his “Intersections Mining Report”.
In this issue:
- Underworld intersects gold over significant widths at Golden Saddle.
- Coro Mining makes new copper porphyry discovery in southern Chile
- San Gold adds to Hinge Zone
Follow this link to download the complete report.
Mackie Research Capital Corporation (MRC) makes no representations whatsoever about any other website which you may access through this one. When you access a non-MRC website please understand that it is independent from MRC and that MRC has no control over the content on that website. The content, accuracy, opinions expressed, and other links provided by these resources are not investigated, verified, monitored, or endorsed by MRC.
The opinions, estimates and projections contained herein are those of the author as of the date hereof and are subject to change without notice and may not reflect those of Mackie Research Capital (”MRC”). The information and opinions contained herein have been compiled and derived from sources believed to be reliable, but no representation or warranty, expressed or implied, is made as to their accuracy or completeness. Neither the author nor MRC accepts liability whatsoever for any loss arising from any use of this report or its contents. Information may be available to MRC which is not reflected herein. This report is not to be construed as an offer to sell or a solicitation for an offer to buy any securities. Member CIPF.