Here's Why You Should Retain Nutrien Stock in Your Portfolio

Core Viewpoint - Nutrien Ltd. is experiencing healthy demand for crop nutrients, supported by strategic acquisitions and cost reduction efforts, despite facing challenges from declining fertilizer prices [1][3][7]. Group 1: Demand and Sales Performance - Nutrien is well-positioned to benefit from increased fertilizer demand, particularly in key offshore markets and North America, leading to record potash sales volumes in the first half of 2024 [3][4]. - Phosphate sales volumes have also increased compared to the first half of 2023 due to strong demand across fertilizer, industrial, and feed products [3]. - The nitrogen sales volumes remained stable year-over-year, indicating consistent demand in major markets [3]. Group 2: Market Dynamics - Global potash demand is expected to rise due to strong grower economics, improved affordability, and low inventory levels [4]. - The phosphate market is benefiting from higher global demand and low inventories among producers and channels [4]. - The nitrogen fertilizer market remains healthy, driven by demand from North America, India, and Brazil [4]. Group 3: Strategic Actions and Cost Management - Nutrien is expanding its presence in Brazil through acquisitions and is expected to continue pursuing targeted opportunities in core markets [5]. - The company is focused on lowering production costs in its potash business and has implemented several strategic actions to reduce controllable costs and enhance free cash flow [6]. - Lower natural gas costs and reduced input costs for ammonia and sulfur are contributing to a decrease in the cost of goods sold [6]. Group 4: Pricing Challenges - Softer fertilizer prices are anticipated to negatively impact Nutrien's margins, with prices for phosphate and potash declining since mid-2022 due to geopolitical factors [7][8]. - Global nitrogen prices have also decreased since early 2023, influenced by higher supply availability and lower energy costs [8]. - The decline in fertilizer selling prices is expected to adversely affect Nutrien's sales and profitability in the near term [8].