 My son's diapers stink fertilizers stink, but let's see whether Fertilizers investments will also stink in the future. Good day, fellow investors Today I will share with you my research that I have done in order to see whether Fertilizers investments, especially potash investment will be good in the long term because they are in the downtrend now So when you start looking at the company like the mosaic or Nutrient or something like that you first look at the outlook for the main product that they are selling As I have been already saying in my other videos the outlook for food is good Which means there will be more need for fertilizers, and I know that fertilizer prices are very low Therefore I was really interested in the sector. The outlook for fertilizers is very positive If we look here, they expect that global potash shipments will increase by about 20% in the next five years Which is a very very strong trend and a positive tailwind for producers there is one little problem with potash as Demand grows so will supply grow. There is plenty of potash in the world You just have to invest a lot of money to mine it But there are some projects that will cover that increase in demand that we have seen as you can see here Capacity will be below maximum production enough to cover for the increase and the operating rate if we look at potash prices We can see that from 2008 to 2012 there has really been a spike because of a supply gap However, given the new projects that are coming I don't expect to see another supply gap in the next decade And I expect potash prices to be stable at current levels This means that if we look at potash producers the current earnings they have Plus minus a little bit of operational efficiency improvements and so on will be the result they will have in the long term So if you want to invest in them, okay, look at the price to earnings ratios What are their earnings free cash flows dividends? What is the sustainability of the dividend? And if you're happy with that you might invest but as from a sector perspective There won't be much going on because of this so BHB Janssen project It will cost about 14 billion. They have already spent almost 4 billion, but the project is in delay They have tried to sell it A lot of things have happened because of low potash prices However, if ever even potash prices increase they could speed up, ramp it up in a few years And then you have huge supply disrupting the sector Berlaruskali-Patryskovsky project could add 3 million tons Another example of a project, Dana-Kill project in Ethiopia could add another 2 million tons Just in 2017, two greenfield projects 1.4 million tons in Turkmenistan and 2 million tons project of K plus S in Saskatchewan So for example, if you read what Mosaic has to say They think that the supply and demand will be balanced However, some other analysts think there will be Armageddon in potash prices They will go down and even much lower than we are looking them now That's a risk I'm not willing to take I don't know whether I can trust the management of Mosaic We never should trust corporate management So the risk reward is really not rewarding for me The risk is big if potash prices continue to decline due to oversupply The upside is limited because if potash prices go higher There will immediately be more supply coming also from the plants that have been idled in the past So it's a little bit a negative situation there Similarly, for phosphate the market is in the same situation Expected grow in supply both in demand This is another example of the huge disruption that can come The Maden Vad project in Saudi Arabia for phosphate Expects to produce 16 million tons per year when fully producing Further, your last far phosphate hub in Morocco Will enable production to go from the current 3 million tons to 13 million tons So that's 20 million additional tons That's almost 40% of the market which is something crazy And something to take into consideration when investing in such companies So, sweet and short, this is my story Risk, high, reward, limited due to oversupply So I won't be looking at those companies until I see for example At current prices or at even lower prices I see a company like Mosaic with a price to earnings ratio of 10 And a dividend yield of 5% Because when I see that prices can't go lower And I have a 10% earnings yield and a 5% dividend Then I like to invest Now at price earnings ratios of 30, 40 With smaller dividends, with dividends being cut I don't see them being reinstated to the previous levels So it's simply too much risk to investigate deeper into the sector I look forward to your comments I hope you disagree with me I'm always here to learn, to want to learn from more But from my perspective, the fertilizer potash potassium segment Is too risky with too little potential reward That's how it is I'll see you in the next video