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With the spot price of corn surging, it’s hard not to be tempted to put on a slew of derivative trades.However top commodity trader Joe Terranova warns that some trades that you'd think should work, aren't working right now.“Usually the ferts (fertilizer stocks) are the right play,” he says.
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That is, typically, higher commodity prices drive demand for fertilizer because farmers plant more. In turn, that benefits companies such as Potash, Mosaic and Agrium.However, Terranova says price is truth and the truth is, “the ferts have been underperforming over the past several weeks.”
After the broadcast he told us, “Given the significant move higher in commodities, ferts should be a lot higher. That’s confusing – and traders like me listen to the market. The message from the market is telling me to avoid ferts. I can't tell you why, but the message is clear to me.”
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