Fertilizer Crisis Triggered by the Iran War: Why Bayer, MustGrow Biologics, and K+S Offer the Perfect Portfolio Mix

Bayer – Between Glyphosate and Hopes for Growth

While the glyphosate dispute dominates the headlines, Bayer's day-to-day business delivers solid results. The Crop Science division increased revenue last year by 1.1% on a currency-adjusted basis to EUR 21.6 billion. The main driver was the strong corn seed business, which benefited from product demand and an agreement with Corteva. However, the regulatory environment is causing challenges for the division. The loss of dicamba approval in the US significantly weighed on the soybean and cotton businesses. Management expects this year to be a transitional one. Hopes rest on new products, which are expected to provide momentum again starting in 2027.

In the pharmaceuticals division, losses from established drugs are being offset by new promising candidates. The cancer drugs Nubeqa and the kidney drug Kerendia are emerging as true blockbusters with sales jumps of 62% and 88%, respectively. Kerendia is expected to break the billion-dollar mark in 2026, supported by positive study data in heart failure patients. However, the loss of the patent for the anticoagulant Xarelto has dealt a severe blow, with revenue plummeting by nearly a third. The stroke drug Asundexian provided some good news, demonstrating clear superiority in studies, which has analysts feeling confident about future growth.

Operationally, Bayer met expectations for 2025: EUR 45.6 billion in revenue and core earnings per share of EUR 4.91. However, the outlook for 2026 is subdued. The company expects revenue to stagnate, and free cash flow threatens to slip deep into the red due to payments amounting to billions in the glyphosate dispute. Up to EUR 2.5 billion in outflows are budgeted. Investors' hopes now rest on the US Supreme Court. A landmark ruling in June could render many lawsuits obsolete. Until then, Bayer remains an investment that balances operational strength against legal liabilities. The stock is currently trading at EUR 38.705.

MustGrow Biologics - When Mustard Becomes a Weapon

Agriculture is undergoing a profound transformation. Stricter environmental regulations, societal pressure to operate more sustainably, and the loss of proven chemical agents are increasingly putting conventional farming methods under pressure. Amid this tension, a Canadian company is positioning itself with an unusual idea. It uses the natural heat of mustard to solve the problems of tomorrow. MustGrow Biologics, based in Saskatoon, extracts from mustard seeds the compounds responsible for the pungent flavor of wasabi or horseradish. These are concentrated and processed into agricultural inputs designed to serve as a genuine alternative to synthetic products, backed by over 110 patents and a management team that holds nearly 20% of the shares.

Particularly promising is its application to a problem threatening Canada's most important crop - clubroot in canola. To date, there are hardly any effective remedies against this soil-borne disease. In two-year field trials covering approximately 40 hectares, the product TerraMG™ was able to reduce the spore concentration of the disease in the soil by up to 95%. In the wet year of 2024, when disease pressure was high, yields rose by a whopping 19%. That represents an added value of approximately EUR 60 per hectare for the farmer. These results are not laboratory figures but were achieved under real-world conditions and prove that the technology works on a large scale as well.

The business model focuses specifically on partnerships to conserve capital. Production is handled by contract manufacturers in Asia, while sales in the US and Canada are already bearing fruit. With TerraSante™, an organic fertilizer, the company was at times unable to meet demand because its warehouses were empty. However, the most strategically important step is the partnership with Bayer. The agricultural conglomerate secured the rights for Europe, the Middle East, and Africa and, according to its own statements, is investing a high double-digit million amount in the approval process. This means a financially strong partner is covering the costs of market development, while MustGrow can reap the rewards in the form of milestone payments and licensing fees. The stock is currently trading at CAD 0.55.

K+S - Solid Foundation in Uncertain Times

K+S's figures for the 2025 fiscal year show a company that delivered despite adverse circumstances. Revenue remained stable at EUR 3.65 billion, while operating profit (EBITDA) rose to EUR 613 million, a substantial increase over the previous year. This was primarily due to better prices in the agricultural business and for industrial products, which more than offset higher energy and personnel costs. At EUR 29 million, free cash flow was lower than in 2024 but exceeded expectations. In line with company policy, the dividend will be reduced to EUR 0.07 per share.

Currently, the Group is benefiting from the tense geopolitical situation. The escalation in the Middle East is disrupting the nitrogen fertilizer markets, a business that does not directly affect K+S. The sulfur market is far more interesting. Around 40% of globally traded sulfur passes through the Strait of Hormuz, which is currently blocked. K+S has a structural advantage here because the company supplies the sulfur for its specialty fertilizers (SOP) directly from raw salt, without external procurement. Additionally, 70% of European gas demand is locked in at favorable terms, which stabilizes the cost base.

For the current year, the Executive Board expects EBITDA of between EUR 600 and 700 million. The course of the spring season will be decisive. Global potash demand is picking up, with Brazil already showing slightly rising prices. The exceptionally strong road salt business following the harsh winter provides an additional boost. Achieving the forecast range depends primarily on two factors: potash prices in Brazil and a sales volume of 7.4 to 7.6 million tons. Investors tracking the stock should keep an eye on the exchange rate, as every EUR 0.05 shift impacts earnings by approximately EUR 20 million. Currently, one share costs EUR 17.67.

The escalation in the Persian Gulf reveals the vulnerability of global agricultural markets and is steering the future away from synthetic solutions and toward sustainable ones. Bayer stands for operational stability but is grappling with legacy issues related to glyphosate, while betting on a biological future with MustGrow. MustGrow Biologics is driving this innovation forward with its patented mustard technology and delivering measurable results. K+S, in turn, benefits directly from supply chain disruptions, as it is self-sufficient in sulfur thanks to integrated production. For investors, this creates a balanced mix for the portfolio: Bayer as a stability anchor, MustGrow as an innovation opportunity, and K+S as a crisis beneficiary.