Fertilizer Stocks Wilt Amid Trade Tensions
07 August 2019 - 4:58AM
Dow Jones News
By Jessica Menton
Shares of farm-supply companies came under further pressure
Tuesday following disappointing quarterly results from fertilizer
maker Mosaic Co. amid an escalation in the U.S.-China trade
fight.
Farm-supply companies have fallen this week after Beijing said
it would suspend all imports of U.S. agricultural goods, a
retaliatory measure to President Trump's decision to impose new
tariffs of 10% on roughly $300 billion of imports from China.
In addition to trade woes, fertilizer companies have been hurt
by declining sales as U.S. farmers in the Midwest faced persistent
wet weather this past spring.
Mosaic's stock slid 12% in early afternoon trading Tuesday, on
pace for its biggest one-day drop since July 2013. The company,
which cut its full-year earnings forecast following severe flooding
in the U.S. Farm Belt, was the worst performer in the S&P 500,
with shares headed for a fresh 52-week closing low.
The losses spread to other fertilizer makers including Nutrien
Ltd. and CF Industries Holdings Inc., which fell 4% and 0.5%,
respectively. Meanwhile, U.S. farm-equipment maker Deere & Co.
and chemical companies Bayer AG and Corteva Inc. have each dropped
at least 4.3% apiece so far this week.
Heightened tensions between the world's two biggest economies
have revived worries that the trade battle could hinder the
decadelong U.S. economic expansion, some analysts and investors
said.
Trade and weather have already been weighing on the incomes of
U.S. farmers, which have been hurt by lower overseas purchases of
U.S. corn, soybeans and other crops. This is expected to crimp
sales of fertilizer and tractors.
These stocks may not recover soon.
"We don't think a trade deal will get done before 2020,
therefore we're recommending that investors stay away from
trade-sensitive areas of the market such as agriculture even though
these companies are getting cheap, " said Matthew Granski, director
of strategy at Miracle Mile Advisors in Los Angeles, which has $1.7
billion in assets under management.
Write to Jessica Menton at Jessica.Menton@wsj.com
(END) Dow Jones Newswires
August 06, 2019 14:43 ET (18:43 GMT)
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