Key insights
- Disruption in the Strait of Hormuz could significantly impact global fertilizer supply, leading to price increases. Natural gas and phosphate supplies are particularly vulnerable. US-based fertilizer companies like MOS and CF could benefit from constrained global supply and relatively insulated domestic production. The author has taken a long position in MOS calls, anticipating a delayed but substantial price movement in fertilizer stocks.
Everyone’s watching oil right now, which makes sense.
But if Hormuz disruption actually holds, the second-order effect seems way bigger than people are pricing in. It’s not just oil moving.. a massive chunk (1/3) of global fertilizer production and logistics runs through that region, directly or indirectly.
From what I’ve been digging into:
- Natural gas -> nitrogen production gets tight fast 2. Phosphate supply is already limited globally 3. Fertilizer demand doesn’t drop (food still needs to be produced)
So oil spikes first… but fertilizer feels like it lags, then moves harder once shortages actually show up. What’s weird is there are barely any US names to play this. Most global supply gets constrained, but domestic producers are relatively insulated.
Been looking at MOS and CF.
Not saying to do anything here, but this could be one of those setups people ignore until it’s too obvious and doesn't make sense anymore.
I bought 209 calls on MOS Sept 18th expiry 35 strike. Don't want to miss a move here.