The company foresees better market conditions in H2/20 and 2021 and our findings lead us to concur with this view. Potash prices should remain resilient following the settlement of the China and India contracts. Meanwhile, phosphate and nitrate prices have rebounded from lows seen last quarter. Case in point, the supply-demand backdrop has improved markedly, thanks to the ongoing drawdown in fertilizer inventories (Figure 4, first panel). Key fertilizer markets, such as Brazil and India, appear strong heading into peak application seasons. As for China, imports of corn, wheat and soybeans are rebounding sharply, suggesting tight markets (second panel). In turn, US fertilizer shipments and exports seem to be finally turning the corner. In all, we expect the recovery in fertilizer prices to continue (Figure 5) owing to sustained Chinese demand for grains and growers enjoying good returns for their crops worldwide. Admittedly, the covid-19 uncertainties remain a risk, but the global population needs calories, independently of the ongoing pandemic. In all, we reiterate our June 10th OW upgrade on fertilizers such as NTR-T, CF-US, FMC-US, MOS-US and the SOIL-US ETF.
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