Deere & Company (NYSE:DE) suffered two downgrades, as JPMorgan (NYSE:JPM) and Wells Fargo (NYSE:WFC) believe they're at the top of their valuation, increasing almost 30 percent since the early part of July.
Wells Fargo's Andrew Cases slashed Deere from "Outperform" to "Market Perform," while JP Morgan's Ann Duignan lowered the agricultural manufacturer from "Overweight" to "Neutral."
A drought in Russia and the resultant increase in corn prices and other crops has helped the industry surge to higher levels, including Caterpillar (NYSE:CAT), which has also pushed up close to yearly highs.
Caterpillar is moving up for different reasons, as the mining sector also has prices surging and mining and construction equipment sales have been in higher demand because of it.
In the near term it looks like they'll have a hard time moving much higher, and will probably remain level for a while.
Showing posts with label Russia Drought. Show all posts
Showing posts with label Russia Drought. Show all posts
Monday, October 4, 2010
Tuesday, August 10, 2010
Russia May Resume Wheat Exports in October
Deputy Prime Minister Viktor Zubkov, the top agriculture official in Russia, said Russia could resume exporting wheat in October.
Before a final decision is made, Zubkov said they'll look at the final figures concerning the wheat harvest.
Countries like Israel, Turkey and Egypt are major importers of Russian wheat, and have been in close contact with Zubkov concerning whether they'll be exporting wheat, in order to develop alternative sources if Russia continues the wheat export ban.
Even with ample global wheat supplies, the price of wheat shot up after the Russian announcement they were suspending exports. That is based on emotion rather on the reality there could be a wheat shortage, which there isn't.
Before a final decision is made, Zubkov said they'll look at the final figures concerning the wheat harvest.
Countries like Israel, Turkey and Egypt are major importers of Russian wheat, and have been in close contact with Zubkov concerning whether they'll be exporting wheat, in order to develop alternative sources if Russia continues the wheat export ban.
Even with ample global wheat supplies, the price of wheat shot up after the Russian announcement they were suspending exports. That is based on emotion rather on the reality there could be a wheat shortage, which there isn't.
Friday, August 6, 2010
Wheat Fears Wane as Prices Plunge on Ample Global Supply
Wheat prices have soared recently on the hyped-up drought story in Russia, which while real, when compared with the global wheat market, wasn't as big a story as was led to believe, or as big a risk.
As the media catch up with the reality of the global wheat market, and quit their narrow focus on Russia, the supply of wheat is much stronger than when the price went up to over $13 a bushel in the early part of 2008, which ended with food riots around the world.
That is less likely to happen this time around, as stockpiles today are roughly 50 percent higher than they were during the early 2008 period. They are also approximately 30 percent of the average annual global consumption, offering a wider range of protection than in the past.
Of course these times of fear and emotion-driven data are perfect for those looking to move in and out of the market and make quick and predictable profits.
But I think it's going to settle down now that emotions are settling down and the overall supply picture is being looked at.
Many countries have increased their wheat acreage, not only in response to the 2008 crisis, but before that as well, understanding the potential risks associated with weather and grains.
This doesn't take away from the possibility of food inflation related to the increase in wheat, as it still must pass through system, and those costs will be locked in for the most part, and that will cause prices of bakery goods and cereal to rise at some point.
That isn't to say other events couldn't arise that could cause wheat prices to go up, but as it stands today, global supplies are ample, and we'll see wheat prices continue to fall, unless a different set of factors become part of the equation.
As the media catch up with the reality of the global wheat market, and quit their narrow focus on Russia, the supply of wheat is much stronger than when the price went up to over $13 a bushel in the early part of 2008, which ended with food riots around the world.
That is less likely to happen this time around, as stockpiles today are roughly 50 percent higher than they were during the early 2008 period. They are also approximately 30 percent of the average annual global consumption, offering a wider range of protection than in the past.
Of course these times of fear and emotion-driven data are perfect for those looking to move in and out of the market and make quick and predictable profits.
But I think it's going to settle down now that emotions are settling down and the overall supply picture is being looked at.
Many countries have increased their wheat acreage, not only in response to the 2008 crisis, but before that as well, understanding the potential risks associated with weather and grains.
This doesn't take away from the possibility of food inflation related to the increase in wheat, as it still must pass through system, and those costs will be locked in for the most part, and that will cause prices of bakery goods and cereal to rise at some point.
That isn't to say other events couldn't arise that could cause wheat prices to go up, but as it stands today, global supplies are ample, and we'll see wheat prices continue to fall, unless a different set of factors become part of the equation.
Wednesday, July 28, 2010
Is Wheat Supply Really Under Pressure?
With the focus on the drought in Russia, and losses of production is some parts of Europe, the impression we're facing a severe shortage of wheat has been put forth by the press, but the reality is there is so much wheat out there, the losses from Russia and Europe are largely irrelevant.
Even with wheat prices continuing to find support and move upward, the reality of the bountiful wheat harvest, which will be realized or focused on in August, will again put downward pressure on wheat prices going forward.
In spite of the surge in wheat prices the last month, expectations are prices will probably end the year lower by about 2 percent over last year.
It's even fortunate the Russian drought has caught the eye of the agriculture press, or wheat prices probably would have been much lower than that.
South America and Australia are particularly strong this year, and wheat exporters will have pressure on margins again as wheat prices begin their inevitable downward march, as global inventories remain strong in spite of drought news coverage.
Even with wheat prices continuing to find support and move upward, the reality of the bountiful wheat harvest, which will be realized or focused on in August, will again put downward pressure on wheat prices going forward.
In spite of the surge in wheat prices the last month, expectations are prices will probably end the year lower by about 2 percent over last year.
It's even fortunate the Russian drought has caught the eye of the agriculture press, or wheat prices probably would have been much lower than that.
South America and Australia are particularly strong this year, and wheat exporters will have pressure on margins again as wheat prices begin their inevitable downward march, as global inventories remain strong in spite of drought news coverage.
Wednesday, July 21, 2010
Wheat Futures Up on Supply Uncertainty
The recent up and down movement of grains continues, and that includes wheat futures, which were back up again today on concerns over whether wheat inventories will be able to meet demand.
Dry weather in the European Union, Russia and Kazakhstan has generated the most concern, although Russia sold Egypt wheat recently, causing some to think the U.S. isn't pricing wheat correctly, and is attempting to charge too much, even with the bad weather conditions.
Countering some of this is the good weather in the Midwest of the United States, which has become cooler and wetter, increasing the odds of a much better crop than if dry, hot conditions had continued.
All of this is speculation, and even if things are as bad as they are being passed off as, a growing number of countries have increased wheat production over the last several years, and it remains to be seen if there really is a supply problem, or the industry is creating that narrative in order to jack up prices.
After three straight days of falling prices, wheat rebounded to $5.8825 a bushel on the Chicago Board of Trade, gaining 11.25 cents, or 1.9 percent.
Wheat futures for September delivery on the Kansas City Board of Trade increased 12 cents to $6.015 a bushel, or 2 percent.
Dry weather in the European Union, Russia and Kazakhstan has generated the most concern, although Russia sold Egypt wheat recently, causing some to think the U.S. isn't pricing wheat correctly, and is attempting to charge too much, even with the bad weather conditions.
Countering some of this is the good weather in the Midwest of the United States, which has become cooler and wetter, increasing the odds of a much better crop than if dry, hot conditions had continued.
All of this is speculation, and even if things are as bad as they are being passed off as, a growing number of countries have increased wheat production over the last several years, and it remains to be seen if there really is a supply problem, or the industry is creating that narrative in order to jack up prices.
After three straight days of falling prices, wheat rebounded to $5.8825 a bushel on the Chicago Board of Trade, gaining 11.25 cents, or 1.9 percent.
Wheat futures for September delivery on the Kansas City Board of Trade increased 12 cents to $6.015 a bushel, or 2 percent.
Subscribe to:
Posts (Atom)