Investing in fertilizer–mining companies in times of food scarcity

Helyette Geman and Pedro Vergel Eleuterio

Resources Policy, 2013, vol. 38, issue 4, 470-480

Abstract: The primary goal of the paper is to show the validity of investing capital in fertilizer–mining companies, both from a market return perspective for individual or institutional investors, or from a hedging standpoint for insurance companies and other economic actors exposed to inflation risk and high agricultural commodity prices. After providing some elements on the fertilizer market and describing the joint dynamics of corn, wheat and fertilizer prices over the last decade, we analyze an exhaustive sample of listed fertilizer producing companies over the years January 2004–December 2012. We show that their shares generated quite good returns over the whole period and extremely high ones during the years January 2004–December 2007, both in absolute terms and compared to their betas. We also exhibit that these returns display higher sensitivities to major agricultural indexes than to the World Bank Fertilizer Index, making the hedging argument quite compelling.

Keywords: Fertilizer–mining companies; Agricultural commodities; Inflation risk; Fertilizer equities; Investment strategy (search for similar items in EconPapers)
Date: 2013
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (8)

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S030142071300055X
Full text for ScienceDirect subscribers only

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eee:jrpoli:v:38:y:2013:i:4:p:470-480

DOI: 10.1016/j.resourpol.2013.07.004

Access Statistics for this article

Resources Policy is currently edited by R. G. Eggert

More articles in Resources Policy from Elsevier
Bibliographic data for series maintained by Catherine Liu ().