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Fallow Season For Fertilizers- US-FOREX.US

Forex-Publisher — Thu, 16 Jul 2009 20:46:06 +0000

Fertilizer companies’ second-quarter results will likely meet analysts’ softened expectations when they start reporting next week, but all signs suggest they won’t come close to topping last year’s figures.On Monday, the market absorbed industry reports that the Russian producer Silvinit
agreed to sell Indian buyers 850,000 metric tons of potash through March 31, 2010 at 460 per metric ton-more than 25% lower than last year’s contract. The news defied market expectations that a significant period of slowed global consumption, declining Indian inventories and an anticipated future pick-up in global demand would have placed the bargaining power firmly on the side of potash producers. The contract price secured by Indian buyers was roughly 20% lower than the high end of some of the market’s contract price projections. With more contracts yet to be settled-the Indian Potash Limited contract is expected to greatly influence the negotiations. “This is a large volume contract between a major seller and large buyer, we thus believe this would likely establish the market floor price and set the range for Chinese buyers,” said UBS analyst Joe Dewhurst.Soleil Equity Research analyst Mark Gulley said the recent contract activity in India could result in remaining Indian and Chinese contracts settling down by 100 to 150 per metric ton.The news prompted a rash of downward revisions to potash producers’ 2009 and 2010 earnings on account of lower expected potash prices. On Tuesday UBS analyst Don Carson lowered his 2009 profit forecast for Potash
to 4.55, from 6.20, and slashed his 2010 expectations to 8.30, from 10.50. He cut his 2010 estimate for Mosaic
by 23%, to 3.15, and now expects Intrepid Potash
to have 2009 and 2010 earnings that are roughly 20% lower at 1.45 and 2.20, respectively.
The lower prices, however, are likely to improve sales of crop nutrients since farmers need to replenish inventories, but the weaker pricing will temper earnings growth. Carson maintained “buy” ratings on the companies and said the “lower potash market price should unleash considerable pent-up demand, initially from overseas buyers and then from domestic buyers beginning this fall.” According to his estimates, global purchases have been running 25% to 35% below last year’s levels. On July 22, phosphate and potash producer Mosaic
reports fourth-quarter earnings followed by second-quarter reports from Bunge
, Terra Industries
and Potash on Thursday.RBC Capital Markets analyst Fai Lee expects Potash’s second-quarter profit to be 84% lower than the prior year’s quarter, at 44 cents a share-a penny more than management’s downwardly revised estimate, excluding an arbitration claim settlement of 27 cents a share. Lower potash sales volumes were responsible for the weak quarter. Lee projects 450,000 metric tons vs. 2.7 million metric tons a year ago. Slumping phosphate and nitrogen prices also contributed to the expected declines. During Thursday’s conference call, Lee expects management to lower its year-end proft guidance of 7 to 8 a share. Analysts polled by Thomson Reuters have been anticipating a year-end profit of 5.42 a share on sales of 5.2 billion. Agrium and Intrepid Potash report second-quarter earnings on Aug. 5 and Aug. 7, respectively. Lee forecasts earnings of 24 cents a share for Intrepid, compared with last year’s second-quarter profit of 50 cents a share, and potash sales volumes are anticipated to be 90,000 tons, or 58% lower than a year ago. Analysts polled by Thomson Reuters have been projecting a second-quarter profit of 25 cents a share on sales of 77.4 million.
Regarding Intrepid and Potash, Lee considers current valuations attractive for the long-term but expects gains of potash producers’ shares to be limited until potash prices firm up, making them an unappealing short-term investment. Stocks across the fertilizer sector gained strength during Thursday’s afternoon trading session. Potash shares were up by 3.23, or 3.7%, at 90.99, while shares of Mosaic and Intrepid Potash traded higher, up by 11.4% and 6.4%, respectively. Agrium
and Terra Industries were also higher at 5% and 1.1%.

China Gobbles Up U.S. Soybeans – US-FOREX.US

Forex-Publisher — Thu, 09 Jul 2009 21:46:48 +0000

With the sun shining over the U.S.’ key crop-growing regions, the clouds that settled over agricultural futures market earlier in the week lifted Thursday, thanks to hefty export sales.Investors flooded into the agricultural commodities market on Thursday, lifting prices of soybeans, corn and wheat after the U.S. Department of Agriculture reported strong crop exports-particularly for soybeans. China ordered 283,500 metric tons of the beans before the upcoming 2009 harvest and 830,000 metric tons for delivery after Sept. 1. The USDA expects domestic farmers to sell nearly 28 million tons of soybeans-roughly a quarter of global soybean sales-by the end of August.Prices on U.S. crop futures have been pressured ever since the U.S. Department of Agriculture released its acreage report in late-June showing higher-than-expected plantings of corn and soybean crops. Since the report’s release, sunnier and drier conditions have allowed farmers to play catch-up on crop plantings that were previously delayed by soggy weather-leading the market to anticipate much higher crop stockpiles when the USDA releases its updated supply and demand forecasts and crop production report on Friday morning.After slipping to a three-month low on Wednesday, soybeans for November delivery traded 24 cents higher during Thursday’s afternoon trading session at 9.16 a bushel and the July contract gained 26.4 cents to settle at 11.10 a bushel. December corn was also up, by nearly 5 cents at 3.39 a bushel. Soybean and corn futures contracts, however, have lost roughly 11% and 7%, respectively, in the last week, using Wednesday’s closing prices. The weakening of the U.S. dollar on Thursday also contributed to strength seen across the commodities sector.It will be interesting to see whether Friday’s supply report from the USDA will have a significant impact on commodities prices. The market is expecting to see stockpiles raised from forecasts of 210 million soybean bushels and 1.09 billion corn bushels, as projected in June. Strong export sales, however, will likely keep U.S. soybeans in tight supply.Shares of companies throughout the agribusiness sector traded broadly higher Thursday afternoon. Fertilizer companies Agrium
, CF Industries
and Mosaic
rose 3.6%, 1.7% and 5.5%, respectively; and Potash
added 3.34, or 3.7%, to 93.94. Tractor Supply
, which operates retail farm and ranch stores throughout the U.S., was up by 27 cents, or 0.6%, at 44.97.
On Wednesday, Tractor Supply said its second-quarter and year-end earnings would be higher than anticipated, thanks to trimmed marketing expenses. Year-end sales, however, would be slightly lower than previously forecast-between 3.15 billion and 3.25 billion, down from a prior range of 3.2 billion to 3.3 billion-since big-ticket sales have been sluggish.
Thomson Reuters contributed to this article.

Corn Ripe For The Picking – US-FOREX.US

Forex-Publisher — Thu, 02 Jul 2009 21:46:03 +0000

Grain prices lost ground on Thursday as the market continued to absorb Tuesday’s acreage report from the U.S. Department of Agriculture, which showed an increase in corn plantings. A bountiful corn harvest would be a much-needed boon for food, ethanol and fertilizer companies that have swallowed increasing input costs resulting from high corn prices. Wet weather didn’t appear to negatively impact corn planting as much as the market had expected. The USDA’s 2009 forecast of 87.0 million acres puts the new crop at the second-largest planting since 1947. Although downpours significantly delayed the planting period, the arrival of drier weather in May allowed farmers to play catch-up. Investors had anticipated a significant reduction to corn crop acreage resulting from soggy weather as farmers swapped corn fields to soybeans, which can be planted later and require less fertilizer. In March, the USDA estimated 2009 U.S. corn plantings at 85 acres and soybean plantings at 76.02 million acres. Industry estimates were for a rough 1-2 million-acre move from corn to soybeans.Sudakshina Unnikrishnan, a Barclays Capital analyst, expects the upped acreage to continue to weigh on corn prices but said higher U.S. supplies will likely improve demand for the commodity from ethanol and lifestock producers eager to buy while prices are low. Soybeans, a common ingredient in food products and animal feed, will remain costly despite data showing that U.S. soy plantings are at an all-time high – the old crop remains in tight supply due to the Argentinean drought and strong buying from the Chinese. “A key near-term price driver for soybeans is likely to be any slackening in the pace of Chinese imports as well as any release of Chinese stockpiles, which will temporarily weigh on prices but the implications of the acreage report bode well for soybean prices,” Unnikrishnan said.
On Thursday, corn for December delivery lost 12 cents to settle at 3.57 a bushel and soybeans for November delivery shed nearly 10 cents to settle at 10.06 a bushel. Meat producers traded broadly lower during Thursday’s afternoon trading session with the exception of poultry producer Sanderson Farms
, which added 47 cents, or 1%, to 46.98. Hormel Foods
and Tyson Foods
were 3% and 1.7% lower at 34.39 and 12.69, respectively. Ethanol producers Green Plains Renewable Energy and Pacific Ethanol also traded about 5% lower late Thursday at 6.75 and 37 cents, respectively.
Strong demand from consumers eating more meals at home and moderating commodity costs have created favorable profit margins for food companies like General Mills
, which soundly beat expectations when it reported fourth-quarter earnings on Wednesday and guided for 2010 earnings that were higher than analysts had been anticipating. On Thursday, Janney analyst Jonathan Feeney lifted estimates for Kellogg
, citing expectations for a similar scenario when it reports second-quarter earnings on July 30.The fertilizer industry is also expected to benefit from more corn plantings-particularly in the long term since larger harvests result in increased soil nutrient depletion rates.”Given the reduced fertilizer application rates observed over the last nine months, we believe increased planted acres could reduce overall soil fertility levels, which may be positive for fertilizer demand in the future,” said RBC Capital Markets analyst Fai Lee.Fertilizer companies closed Thursday’s trading session moderately higher. Potash
shares gained 4.79, or 5.3%, at 95.69; Mosaic
added 1.62, or 3.7%, at 45.42; and Agrium
rose by 95 cents, or 2.4%, to 40.36.
The Associated Press contributed to this article.

Corn Is King Says USDA – US-FOREX.US

Forex-Publisher — Tue, 30 Jun 2009 18:45:57 +0000

A bearish report from the U.S. Department of Agriculture buried crop prices on Tuesday as the market absorbed higher-than-anticipated planting acreage for corn and soybeans. Wet weather didn’t appear to negatively impact corn planting as much as the market had expected. The USDA’s 2009 forecast of 87.0 million acres puts the new crop at the second-largest planting since 1947. Although downpours significantly delayed the planting period, the arrival of drier weather in May allowed farmers to play catch-up. Corn for December delivery lost the maximum amount during Tuesday’s trading session, dropping 30 cents, or 7.6%, to 3.67 a bushel in early-afternoon trading. Soybeans were another sore spot, with the November contract down by 22.8 cents, or 2.3%, at 9.61 a bushel during Tuesday’s afternoon trading session after the USDA forecast a record planted area for the oilseed with 76.5 million acres. Expectations for a bigger harvest could mean lower commodity prices, which could ease margins of ethanol plants, food companies and meat producers. Trading was mixed among ethanol producers, with Green Plains Renewable Energy
and Pacific Ethanol
up by 3.1% and 9.7%, at 6.26 and 40 cents, respectively; while BioFuel Energy
was down by 0.8% at 63 cents. Meat producers traded broadly lower with the exception of Smithfield Foods
, which was up by 3 cents, or 0.2%, at 13.84. Hormel Foods
and Tyson Foods
were down by 0.9% and 2.3%, respectively, and Conagra Foods shed 48 cents, or 2.5%, to 18.97 during Tuesday’s afternoon trading session.
Investors had anticipated a significant reduction to corn crop acreage resulting from soggy weather as farmers swapped corn fields to soybeans, which can be planted later and require less fertilizer. In March, the USDA estimated 2009 U.S. corn plantings at 85 acres and soybean plantings at 76.02 million acres. Industry estimates were for a rough 1-2 million-acre move from corn to soybeans.DTN senior analyst Darin Newsom, however, doesn’t consider the new crop acreage to be a complete surprise since December to March future spreads leading up to the report suggested a more bearish view than anecdotal chatter indicated. According to Newsom, USDA soybean stock totals at 597 million bushels are much more surprising as ending stocks are estimated at 110 million bushels. He doesn’t see soybean demand as robust enough to burn through 487 million bushels in the near-term.”At some point, the USDA is going to have to revise something to get those numbers more in line,” Newsom said.

What Will Be The Top Crop – US-FOREX.US

Forex-Publisher — Mon, 29 Jun 2009 21:46:08 +0000

Corn and soybean prices slipped a day ahead of the impending U.S. crop acreage report. Investors had anticipated a significant reduction to corn crop acreage since weeks of rainy weather drenched U.S. corn regions, delaying the planting period, and farmers were expected to surrender corn fields to soybeans, which can be planted later and require less fertilizer.Improved weather conditions, however, put crop prices under pressure during Monday’s trading session as investors awaited Tuesday’s acreage update from the U.S. Department of Agriculture. Corn for September delivery settled down by 7.2 cents to 3.90 a bushel during Monday’s session while soybeans for August delivery shed 6 cents to 11.24 a bushel. Shares of fertilizer companies, meanwhile, closed the session broadly higher with Mosaic
up by 2.59, or 6%, at 45.94 and Potash
up by 2.50, or 2.7%, at 95.60. Monsanto
, a specialty seed and herbicide company, closed ahead by 95 cents, or 1.3%, at 76.20. Crop prices also affect meat producers since corn and soybeans are common ingredients in animal feed. Shares of Sanderson Farms
and Tyson Foods
were down by 3% and 0.5%, at 4.90 and 12.78, respectively, at Monday’s close. Hormel Foods
and Smithfield Foods
meanwhile, were up by 1% and 0.6%, at 34.82 and 13.81, respectively.Even if weather makes corn planting possible, farmers might still opt for soybeans since supply concerns have helped prices surge since the beginning of the year. “We continue to expect a 1 million to 2 million acreage switch away from corn and into soybeans, a factor likely to continue to weigh on the outperformance of old-crop soybeans over new-crop futures,” said Barclays Capital analyst Sudakshina Unnikrishnan.