Fertilizer M&A Rumor Does Nothing for Agribusiness ETF

In another sign of investors’ lack of enthusiasm for agribusiness equities and the Market Vectors Agribusiness ETF (NYSEArca: MOO), that ETF is trading only modestly higher Tuesday despite rumors of a potential marriage between two of its components.

Norway’s Yara International (OTC: YARIY) and CF Industries (NYSE: CF)are in talks regarding a merger that would create the world’s largest nitrogen fertilizer company, reports Kjetil Malkenes Hovland for the Wall Street Journal. The companies have even confirmed the talks, according to the Journal.

Confirmation of the potential merger is making only a negligible difference for the already downtrodden MOO. The ETF is trading just two cents higher at this writing despite CF surging 6.5%, perhaps causing some investors to speculate as to what it will take to get the lagging ETF going in the right direction.

CF and Yara combined for 5.6% of MOO’s weight at Monday’s close, according to Market Vectors data. However, if a deal is reached between the two companies, the combined market value would be $26.3 billion, just below $28.9 billion market cap on Potash Corp. of Saskatchewan (NYSE: POT), according to the Journal. Potash is MOO’s fifth-largest holding at a weight of nearly 6.2%.

Since 2008, MOO has only outperformed the S&P 500 twice with the last occurrence in 2010. Some frustrated investors have been departing MOO and doing so in significant fashion. The ETF has lost $2.9 billion in assets this year, a total surpassed by only the SPDR S&P 500 ETF (NYSEArca: SPY) and the PowerShares QQQ (NasdaqGM: QQQ). [Investors Flee Agribusiness ETFs]

MOO has traded slightly lower this year while SPY is higher by nearly 9% and the Materials Select Sector SPDR (NYSEArca: XLB) is up 10%.