Agflation Play

In the March 22nd post, I talked about looking to profit from agflation. It is no longer the case in the grocery market where $100 can get you a shopping cart filled with food for the family. Now you are lucky to push the cart to your car for less than $200 with the very same items.

This week we did very well from the agflation play. And we did so with Mosaic (MOS).

Mosaic is is a producer of phosphate and potash combined, as well as nitrogen and animal feed ingredients. The Company operates its business through four business segments: phosphates, potash, offshore and nitrogen. The Phosphates segment operates mines and concentrates plants in Florida that produce phosphate fertilizer and feed phosphate, and concentrates plants in Louisiana that produce phosphate fertilizer. The Potash segment mines ad processes potash in Canada and the United States and sells potash in North America and internationally. The Offshore segment produces and markets fertilizer products and provides other ancillary services to wholesalers, cooperatives, independent retailers, and farmers in South America and the Asia-Pacific regions. The Nitrogen segment consists of its equity investment in Saskferco and Mosaic’s nitrogen sales and distribution activities.

We ended the week with two very good trading days with this play. The market in most sectors traded pretty well and even better news came Friday. The company said its fiscal third-quarter profit jumped more than tenfold on higher prices. This gave everyone in the game a terrific weekend present!

We pulled out at the close on Friday with the anticipation of not knowing what the week ahead would bring. It was felt that taking profit and waiting to see the sentiment next week was the prudent thing to do verses risk loosing those long awaited gains.

It is no surprise that prices of food and fertilizer to grow the food is not expected to retreat. So we will look to play MOS again if the technicals are favorable. Fertilizer demand is higher than supply which also makes this play very positive. However the street is where the real game is playing this year so we'll have to keep a keen eye on the road in front of us and try to anticipate as well as react to the bumps in the pavement.

One thing that I have noticed is that in many areas around the city, restaurant traffic has not subsided. This proved to me at least that we indeed are a consumer nation! Despite loss of jobs, higher prices in food and gasoline, we like our luxuries. Perhaps we do not even consider them luxuries. My friends and I have talked about the spending habits of our relatives. Despite not having the means to live within our means and meet our obligations easily, we continue to spend.

There should be laws that prohibit banks from issuing credit cards to people who don't meet certain financial criteria. Also there should be laws which force creditors to review accounts regularly and reduce credit availability. There should be laws to prohibit interest rate increases.

While each individual is to blame for allowing themselves to get into a position of indebtedness, our government allows banks and credit issuing institutions to lend money irresponsibly to folks who have no business getting credit cards or for buying a home too expensive to reasonably afford.

If this is a government of the people, why are the people getting screwed? If we elect leaders, why don't those leaders do the right thing for their constituents? Why don't our leaders do what is right for the common man with pushing ahead on mass solar and wind power projects? Why don't our leaders make it easier rather than harder to be a small business person? Why do capital gains taxes have to be so high as to discourage investment? Why is big business favored over the small businesses? When it is obvious that big business is so often the root of many problems and small businesses are historically the backbone of our country? WHEN IS OUR COUNTRY GOING TO GO BACK TO ACTING FOR THE PEOPLE? It seems that they are against the people and for themselves. Why do we as a people put up with it? When Germany built over 100,000 solar generating plants in 2006 for the people, we are paying ever higher prices and our solar projects are like a needle in a hay stack in comparison?