Strong Crop Production Expected– Lower Farm Incomes And/Or Renewable Opportunity?

Companies Mentioned: Nutrien, CF Industries, LSB Industries, The Andersons, BASF, Unigel, E3 Lithium, Glencore, Huntsman, Ingevity, Mosaic, Repsol, Rio Tinto, Valmont, Cheniere Energy, Marathon Petroleum, PG&E, Pioneer Natural Resources, Phillips 66, TotalEnergies Tellurian, Valaris, Adani Solar, Avangrid, Antora Energy, Cadeler, Ciel & Terre, Danimer, Ecovadis, Energy Vault, Rivian, Lucid, Ineos, Itero, PetPacker, LyondellBasell, Minesto, Mitsubishi Power, Nextchem, Hydrexia, Plug Power
Commodities Mentioned: Natural Gas, Methanol, Ammonia, Copper, Hexene, Phenolic Resin, Polyol, Oil, Hydrogen, Ethanol, Carbon

Key Findings

General Thoughts: Our second global agriculture monthly report targets crop market and input trends in early 2024, with a notable focus on fertilizer and downstream biofuel price and profit trends after producer reports.
Supply Chain/Commodities: Crop consumers expect still high farm income to spur crop production, and crop input suppliers expect it (and lower costs) to spur usage – most demand views leave little room for upside risk.
Energy/Upstream: US natural gas prices are weak and inventories are high, driving higher margins and incentives to invest in the US to consume gas. With LNG on hold, chemicals should step up, especially (blue) ammonia.
Sustainability/Energy Transition: We discuss the high cost of decarbonizing ethanol markets and different US ammonia producer growth (greenfield vs. brownfield; blue, green, or grey) views beyond cheap natural gas.
Downstream/Other Chemicals: We note crop price trends and food producer price hikes to lift margins (despite falling crop prices) which have lifted food costs to a 30yr high as a percentage of US consumer disposable income.