🚨 I’ll be live at 2:30 p.m. ET with Alex Reid🚨
We’ll cover the surge in Brent crude amid the Strait of Hormuz blockade and defensive hedging strategies for the Nasdaq correction and more [tap to join us for Profit Panel]
Planting season is here, and there’s a problem most traders haven’t noticed yet…
We’re heading into March, which means farmers across the country are getting ready to plant — and they’re running into a fertilizer shortage that’s only getting worse.
The more you dig into it, the bigger the shortage looks, and that sets up a straightforward opportunity in a handful of stocks that I’ve been putting on my radar.
CF Industries (CF) is the big U.S. fertilizer name, and it’s the one I’ve been watching closest. I also like the urea side of things with Archer-Daniels-Midland (ADM) and Valero Energy (VLO), and all three are positioned to catch a bid as this shortage plays out.
Why This Setup Makes Sense
Structurally, markets haven’t been looking great lately, and calls across the board have been getting tougher to justify. When conditions are choppy, I want setups backed by real demand — and fertilizer is one of the few areas where demand isn’t optional.
It’s March right now, and farmers are preparing to plant fields — so what are they going to use for inputs? The supply isn’t there like it normally is, and the window to get those inputs into the ground doesn’t wait for anybody.
The interesting part is how the whole supply chain connects. Fertilizer production depends heavily on natural gas because nitrogen fertilizers are created by pulling nitrogen from the air and combining it with hydrogen derived from natural gas.
So when fertilizer demand spikes, natural gas often gets pulled higher with it. That’s another domino to watch as this plays out.
I see CF, ADM and VLO starting to move higher, and this isn’t a one-day or one-week pop — it’s a fundamental supply issue hitting right when demand is peaking.
How I’m Playing It
I’ve been focusing on fertilizer, oil and gas lately because that’s where the big news is. The macro backdrop is shaky, but these names sit in the middle of real-world demand, not just sentiment swings.
For CF, I’ve looked at bull call spreads to keep the risk defined and the cost reasonable. It’s a simple strategy: You buy a call and sell another call at a higher strike, which lowers the total cost while still giving you upside exposure to the move you expect.
In a choppy market, keeping risk controlled matters more than usual. The way I see it, you could buy all three of these — CF, ADM and VLO — and let the shortage and the natural gas connection do the heavy lifting.
The inputs have to come from somewhere, and these are the companies that supply them.
This isn’t about chasing headlines. It’s about recognizing a supply crunch at the exact moment demand can’t afford to wait.
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Geof Smith
Geof Smith TradingÂ
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*This is for informational and educational purposes only. There is inherent risk in trading, so trade at your own risk.
P.S. GOLD: My Methodical Approach Just Hit Its 60th Winner
Gold is at a turning point.
With tensions around Iran still in focus, many expected it to push toward new highs by now.
Instead, price action has been choppy… and that leaves traders with a key question:
Is gold gearing up for another run… or starting to lose momentum?
What happens next likely comes down to how this situation unfolds.
If tensions rise, gold could move quickly.
If things cool off, the reaction could catch a lot of traders off guard.
That’s why I put together a focused Gold broadcast.
Inside, I explained:
- Where gold stands right now
- How it typically reacts during geopolitical events
- And whether this sets up a move toward new highs or something else
No guarantees, of course.
But if you want a clearer view of what could come next, you’ll want to take a look.
Disclaimer: We develop strategies to the best of our ability, but we cannot guarantee a future return. There is always a risk of loss when trading. Past performance is not indicative of future results. Since 12/05/2024, the trading approach discussed today has published 60 trade alerts. All 60 have returned as winning trades, for a 100% win rate. The average return per trade, winners and losers combined, has been 16.88% on an average holding period of 9 days.
