Once again the U.S. Department of Agriculture cut its corn yield projection, dropping it 17 percent from last month to 10.8 billion bushels. Last month the USDA projected a corn yield of 13 billion bushels.
The USDA is always conservative in its downward revisements, so it's quite possible we'll see another significant downward adjustment next month, once the data from northern parts of the country are more conclusive and a fuller picture is made available.
According to the World Agricultural Supply and Demand Estimates report from the USDA, the average farm will produce about 123.4 bushels an acre in 2012, the lowest average yield since 1995.
For soybeans, estimates are for a yield of 2.69 billion bushels, down 12 percent from 2011, and way down from the 3.05 billion bushels the USDA was looking for last month.
Soybean yields are expected to come in at 36.1 bushels an acre this year, the lowest level in 9 years.
Agriculture Secretary Tom Vilsack has foolishly called for more government interference in the markets, pushing for a farm bill that he asserts "gives farmers and ranchers more certainty in this tough time, while giving USDA tools to help those producers affected by weather-related events beyond their control."
In other words, he wants even more entitlements for farmers in order to prop up failed practices. Or to put it another way, he wants taxpayers to bail out the farmers, which of the giant farmers will be the primary beneficiaries.
This is the typical government-is-the-answer-to-everything thinking, where people and the decisions they make are not allowed to fail.
Business is all about using the best data available to see the clearest picture of the future it can. Government has no right to interfere with the true entrepreneurial spirit, and that includes in the agricultural sector.
The one thing that needs to be done is to drop all the failed ethanol supports and also the government props that cause many farmers to be lazy in their practices. They need to learn again to stand on their own and dig even deeper into best practices for the sector.
Showing posts with label Corn Yields. Show all posts
Showing posts with label Corn Yields. Show all posts
Saturday, August 11, 2012
Friday, July 20, 2012
September Corn Soars to Record High
As scorching temperatures and little rain continue to plague the Midwest, the price of corn continues to soar to record levels, closing Friday at $8.245 a bushel, gaining 16.75 cents from the record close on Thursday.
Soybeans also continue their record price climb, with August soybeans jumping 23.75 cents to settle at $17.575 a bushel.
The growing reality that it's too late for much of the corn crop is starting to hit the markets, as even if corn fields in many areas were deluged with rain, it wouldn't do anything to boost the yields, as the time has past for that to happen, with the pollination period being the critical factor for corn yields.
According to the Department of Agriculture, dry conditions with triple-digit heat will continue to linger into next week, weakening the propositions for corn, and further threatening the soybean crop, which while pollinating later than corn, is facing a crucial test.
Soybeans also continue their record price climb, with August soybeans jumping 23.75 cents to settle at $17.575 a bushel.
The growing reality that it's too late for much of the corn crop is starting to hit the markets, as even if corn fields in many areas were deluged with rain, it wouldn't do anything to boost the yields, as the time has past for that to happen, with the pollination period being the critical factor for corn yields.
According to the Department of Agriculture, dry conditions with triple-digit heat will continue to linger into next week, weakening the propositions for corn, and further threatening the soybean crop, which while pollinating later than corn, is facing a crucial test.
Tuesday, October 19, 2010
Will Monsanto (NYSE:MON) Be Best Stock of 2011 after Worst of 2010?
Monsanto (NYSE:MON) has been beat up so much this year that the question of whether or not it may be the worst stock of 2010 has been proffered by some commentators and analysts.
While there has been some market factors involved with the poor performance of the stock, such as disappointing results from it SmartStax corn, its sugar beets being put on hold be a judge until more thorough research has been performed, prices too high in a recessionary environment, and the appearance of, and in some cases, actions, showing there is an arrogance there that the company needs to rein in. One being suing farmers who had seed from neighboring farms of Monsanto coming on their land and Monsanto saying they should have to pay for them.
There has also been some inroads into the market share of some Monsanto seeds by competitor DuPont (NYSE:DD), and of course the loss of patents and market share to products now being offered at commodity prices.
Even with all that stuff that sound ominous, there are numerous other products which make Monsanto still the giant in the field, with little in the way of competition which will knock them out of that spot in the short- or mid-term. It is there's to hold onto if they want to remain the market leader.
What that leads to is their performance this year. While some have openly wondered why Monsanto is performing as they are, they are largely technical analysts who don't understand the public relations side, or simply ignore it.
In today's digital media world, those who don't approve of genetically modified seed and other Monsanto products, can make a lot of noise beyond their numbers to give the appearance of a groundswell of opposition, when in reality it's more noise than a real grass roots uprising.
That's not to say opposition isn't real and effective, just that it's not as big as it seems, and it doesn't stop Monsanto from opening up new markets.
With a company like Monsanto an investor must look past the news that will always be there and look at their pipeline and competitive advantage.
In other words, don't read media stories and assume because there is controversy that the company is doing poorly. Look at their actual performance and whether they're valued closed to what they should be.
For 2010 Monsanto is down over 33 percent, which isn't a reflection of their actual or future performance. While the SmartStax corn seed is important and a part of the reason for such negative share performance. It is because it was considered the major engine of growth in the short-term of the company.
It's not that it isn't a good product, but it hasn't measured up to expectations, and the company has rightly paid the price for it. But it seems there may have been far too much focus on that, by both the company and investors, so the company took a big hit when results showed it wasn't up to par.
But in a relatively short time the price of corn has skyrocketed because of corn yields being lower than expected, so the reasons farmers were disgruntled and pulling back before, which related to whether or not paying the higher price was worth the yield, are pretty much gone with the higher corn prices, and Monsanto could generate higher sales for the spring planting because of that.
New markets are also opening up via approval of Monsanto products, especially in Latin America markets; specifically Brazil and Argentina. Once they gain approval to sell products overseas, Brazil will plant large amounts of Monsanto seed to meet the demand.
The bottom line is Monsanto is so out of favor that it's due for a rebound, and although there are obvious challenges, the underlying fundamentals are still in place. And when they do take off, they could soar.
While there has been some market factors involved with the poor performance of the stock, such as disappointing results from it SmartStax corn, its sugar beets being put on hold be a judge until more thorough research has been performed, prices too high in a recessionary environment, and the appearance of, and in some cases, actions, showing there is an arrogance there that the company needs to rein in. One being suing farmers who had seed from neighboring farms of Monsanto coming on their land and Monsanto saying they should have to pay for them.
There has also been some inroads into the market share of some Monsanto seeds by competitor DuPont (NYSE:DD), and of course the loss of patents and market share to products now being offered at commodity prices.
Even with all that stuff that sound ominous, there are numerous other products which make Monsanto still the giant in the field, with little in the way of competition which will knock them out of that spot in the short- or mid-term. It is there's to hold onto if they want to remain the market leader.
What that leads to is their performance this year. While some have openly wondered why Monsanto is performing as they are, they are largely technical analysts who don't understand the public relations side, or simply ignore it.
In today's digital media world, those who don't approve of genetically modified seed and other Monsanto products, can make a lot of noise beyond their numbers to give the appearance of a groundswell of opposition, when in reality it's more noise than a real grass roots uprising.
That's not to say opposition isn't real and effective, just that it's not as big as it seems, and it doesn't stop Monsanto from opening up new markets.
With a company like Monsanto an investor must look past the news that will always be there and look at their pipeline and competitive advantage.
In other words, don't read media stories and assume because there is controversy that the company is doing poorly. Look at their actual performance and whether they're valued closed to what they should be.
For 2010 Monsanto is down over 33 percent, which isn't a reflection of their actual or future performance. While the SmartStax corn seed is important and a part of the reason for such negative share performance. It is because it was considered the major engine of growth in the short-term of the company.
It's not that it isn't a good product, but it hasn't measured up to expectations, and the company has rightly paid the price for it. But it seems there may have been far too much focus on that, by both the company and investors, so the company took a big hit when results showed it wasn't up to par.
But in a relatively short time the price of corn has skyrocketed because of corn yields being lower than expected, so the reasons farmers were disgruntled and pulling back before, which related to whether or not paying the higher price was worth the yield, are pretty much gone with the higher corn prices, and Monsanto could generate higher sales for the spring planting because of that.
New markets are also opening up via approval of Monsanto products, especially in Latin America markets; specifically Brazil and Argentina. Once they gain approval to sell products overseas, Brazil will plant large amounts of Monsanto seed to meet the demand.
The bottom line is Monsanto is so out of favor that it's due for a rebound, and although there are obvious challenges, the underlying fundamentals are still in place. And when they do take off, they could soar.
Agrium (NYSE:AGU), Viterra (TSE:VT) Set to Outperform?
Much of the agricultural news has been overshadowed by the interesting story related to BHP's (NYSE:BHP) bid of Potash Corp. (NYSE:POT), but the real story is how the lower estimated corn yields will have on nitrogen more than anything, as that's the main fertilizer used on corn. Agrium Inc. (NYSE:AGU) and Viterra Inc. (TSE:VT) could be among the stronger beneficiaries of the trend.
Some analysts are starting to realize that phosphate and potash producers may not benefit near as much as people looking at the sector in a general way may realize.
Corn prices are expected to have support over $5 a bushel over the next 12 months and maybe longer, and that means corn farmers will have more capital to use to invest in nitrogen.
Agrium is set to surpass analysts' expectations, and Viterra has a strong export portfolio which should benefit them in relationship to nitrogen.
Some analysts are starting to realize that phosphate and potash producers may not benefit near as much as people looking at the sector in a general way may realize.
Corn prices are expected to have support over $5 a bushel over the next 12 months and maybe longer, and that means corn farmers will have more capital to use to invest in nitrogen.
Agrium is set to surpass analysts' expectations, and Viterra has a strong export portfolio which should benefit them in relationship to nitrogen.
Tuesday, October 12, 2010
Terra Nitrogen, (NYSE:TNH), CF Industries (NYSE:CF), Syngenta and Higher Corn Prices
Terra Nitrogen Company, L.P. (NYSE:TNH), CF Industries Holdings, Inc. (NYSE:CF) and Syngenta AG (NYSE:SYT) all moved up strongly on Monday as the market digested the lower estimates related to corn, soybeans and wheat, and especially corn and soybeans, whose estimates were lowered by over 20 percent each.
CF Industries and Terra were both up over three percent, while Syngenta moved up over 1 percent on the day.
Much of the agriculture sector increased in share price on Monday, including most farming equipment makers, fertilizer companies and some seed companies, including Monsanto (NYSE:MON).
Larger fertilizer companies like Potash (NYSE:POT), Mosaic (NYSE:MOS) and Agrium (NYSE:AGU) went positive, all up over 1.5 percent, with Agrium finishing up over 2.3 percent.
Syngenta AG moved up at the levels of Potash and Mosaic, closing the day at $53.81, up $0.72, or 1.36 percent. Terra Nitrogen closed the session at $106.52, rising $3.12, or 3.02 percent. CF Industries ended the day at $113.45, gaining $3.55, or 3.23 percent.
CF Industries and Terra were both up over three percent, while Syngenta moved up over 1 percent on the day.
Much of the agriculture sector increased in share price on Monday, including most farming equipment makers, fertilizer companies and some seed companies, including Monsanto (NYSE:MON).
Larger fertilizer companies like Potash (NYSE:POT), Mosaic (NYSE:MOS) and Agrium (NYSE:AGU) went positive, all up over 1.5 percent, with Agrium finishing up over 2.3 percent.
Syngenta AG moved up at the levels of Potash and Mosaic, closing the day at $53.81, up $0.72, or 1.36 percent. Terra Nitrogen closed the session at $106.52, rising $3.12, or 3.02 percent. CF Industries ended the day at $113.45, gaining $3.55, or 3.23 percent.
Monsanto (NYSE:MON) Helped by Lower Corn Yield Projections?
With almost everything going against it, Monsanto (NYSE:MON) may get some help from the recent corn yield estimates which were about 25 percent lower than projected, which should inevitably drive corn prices up even more.
One of the major and successful strategies of DuPont (NYSE:DD) has been to put in the minds of farmers whether or not the added traits of Monsanto's SmartStax corn is worth the extra price.
When early returns from the field revealed yields were lower for SmartStax corn, that added fuel to the fire, and Monsanto is left wondering, along with their shareholders, where future growth was going to come from.
Now that the overall corn yield in the U.S. is far lower than expected, and corn prices sure to increase, that leaves higher margins for farmers to work with, which may persuade them to give Monsanto another try.
Of course DuPont will probably respond to that challenge and lower their prices to gain even more market share.
Even so, if yields are enough to generate interest from more northerly fields, which haven't revealed results yet, Monsanto just may get an unexpected boost from higher corn prices.
That could also include higher soybean prices as well, where soybean yields are over 20 percent lower than estimates too.
One of the major and successful strategies of DuPont (NYSE:DD) has been to put in the minds of farmers whether or not the added traits of Monsanto's SmartStax corn is worth the extra price.
When early returns from the field revealed yields were lower for SmartStax corn, that added fuel to the fire, and Monsanto is left wondering, along with their shareholders, where future growth was going to come from.
Now that the overall corn yield in the U.S. is far lower than expected, and corn prices sure to increase, that leaves higher margins for farmers to work with, which may persuade them to give Monsanto another try.
Of course DuPont will probably respond to that challenge and lower their prices to gain even more market share.
Even so, if yields are enough to generate interest from more northerly fields, which haven't revealed results yet, Monsanto just may get an unexpected boost from higher corn prices.
That could also include higher soybean prices as well, where soybean yields are over 20 percent lower than estimates too.
Agrium (AGU), Potash (NYSE:POT), Mosaic (NYSE:MOS) Soar on Lower WASDE Estimates
Agrium (AGU), Potash (NYSE:POT), Mosaic (NYSE:MOS) all surged today after the release of estimates from WASDE showed corn yields area significantly lower than their recent estimate.
UBS (NYSE:UBS) said they are maintaining their "Buy" rating on Agrium Inc. also citing WASDE estimates. Agrium had the price target raised from $82 to $95.
"WASDE released its latest agriculture estimates this morning (Monday) which we believe indicate an improving agricultural market. Specifically, projected corn production for 2010/11 is down with the projected national corn yield of 155.8 bushels/acre significantly below the previous projection of 162.5 bushels/acre ... We have revised our 2011/2012 EPS estimates from $6.70/6.57 to $6.92/6.60 to reflect stronger fertilizer pricing and fundamentals," said UBS.
Agrium closed Monday at $83, gaining $1.92, or 2.37 percent. Mosaic ended the session at $66.32, an rising $1.02, or 1.55 percent. Potash continues its climb, closing the day at $147.48, an increase of $1.68, or 1.15 percent.
UBS (NYSE:UBS) said they are maintaining their "Buy" rating on Agrium Inc. also citing WASDE estimates. Agrium had the price target raised from $82 to $95.
"WASDE released its latest agriculture estimates this morning (Monday) which we believe indicate an improving agricultural market. Specifically, projected corn production for 2010/11 is down with the projected national corn yield of 155.8 bushels/acre significantly below the previous projection of 162.5 bushels/acre ... We have revised our 2011/2012 EPS estimates from $6.70/6.57 to $6.92/6.60 to reflect stronger fertilizer pricing and fundamentals," said UBS.
Agrium closed Monday at $83, gaining $1.92, or 2.37 percent. Mosaic ended the session at $66.32, an rising $1.02, or 1.55 percent. Potash continues its climb, closing the day at $147.48, an increase of $1.68, or 1.15 percent.
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