Rising Competition, Geopolitical Tensions & Supply Limits: Crop Prices To Benefit, Farm Income & Decarbonization Still At Risk?

Key Findings

General Thoughts: We think crop production could struggle to keep pace with demand in coming periods, though not reflected in current prices, and farm decarbonization efforts need higher prices but favor food price inflation.
Supply Chain/Commodities: We discuss global ammonia markets, adding to our comments yesterday discussing production & logistic issues, Middle East concerns, and rising Ex-US costs lifting North American producer profits.
Energy/Upstream: We flag US shale oil-and-gas producer costs relative to crude prices, as despite a push toward profit rather than volume at all costs, we view these players well positioned – a plus for the US chemical industry.
Sustainability/Energy Transition: We flag US ethanol stocks hitting multi-month lows despite healthy production rates and producer margin weakness. We also discuss waste costs/integration as a differentiator among recyclers.
Downstream/Other Chemicals: We flag the latest monthly UN global food price inflation index reading, which showed its largest monthly gain since March 2022 and first YoY growth posting since July 2023 in September 2024.