Thank you oaksprings, I certainly understand & accept your POV as there is much truth to it, especially in the last few years. A healthy skepticism should be required of all of us. That's what I was trying to convey as my goal in deciphering the relevant from the meaningless by piercing through mendacity when & where I find it.
At the same time I was trying to say that I understand many of the methods used to develop statistical estimates and typically, the types of people that collect & process the surveys, develop the estimates, and perform tests to ensure statistical significance are not the sort of people that have a great deal of tolerance for politics interfering with their numbers. :)
That said, there is always risk of political interference beyond their span of control and before the data is released. Other times statistical anomalies simply occur & one must wait for the strange effects to disappear.
When I find something that I don't like I contact the analysts directly and they are "usually" very friendly and responsive. Oaksprings, we are definitely on the same side. Thank you so much for your comments.
oaksprings, thanks for reading the article. I find your comment quite funny.
My job as an analyst is to not take any individual or organizations word for anything, but to process & interpret all available information into an unbiased opinion of value. If I'm right more than wrong then hopefully you will continue to read my reports, if I'm not then you won't have much use for them and neither will I. :)
That said, USDA reports are based on statistical estimates like all other economic reports and are subject to the limitations inherent in all such analyses. My job is to wade through all that for you. Thanks again for reading me.
Iooman, as always thanks for reading the article. Farmers are buying fertilizer from dealers, the dealers are not replenishing their inventories. In fact, they have stated a desire to by "empty" at the end of the spring planting season.
Dealers purchase a majority of the fertilizer that a bought from producers, not farmers. When the dealers don't replenish inventories this hurts sales volumes & earnings of the producers in the short-term. This is why stocks in the group have behaved so erratically over the short-term and not traded with crop prices as they do when the supply chain is functioning normally.
Many investors have wondered why the stocks have moved this way over the short-term and this is the answer. Thanks again.
Monsanto Q2 Earnings In Full Bloom - What's Wrong With The Stock? [View article]
Nice. LOL.
Crop prices have not risen at a constant rate alongside the rate of inflation. A little less than half of the increase in crop prices is the result of a weakening dollar which began in 2000. As I wrote in my earlier comment, the farm price of corn has only recently risen to these levels $6.00 - $7.00 bushel (since 2006/2007).
I like your response though. :) A lot of people in the twittersphere are confused about the stocks movement today. It takes time to determine if one is ultimately right or wrong.
Monsanto Q2 Earnings In Full Bloom - What's Wrong With The Stock? [View article]
I see. No one can predict an exact top or bottom so don't concern yourself with what you left on the table, you had a great gain I'm sure and thats what counts.
Price movement in the agricultural chemicals sector as a whole should clear once the fertilizer demand picture clears up. Thanks again, I've enjoyed the back and forth. :)
Monsanto Q2 Earnings In Full Bloom - What's Wrong With The Stock? [View article]
1) At a recent price of $6.55 per bushel corn is hardly trading at a poor market price. Between 1974 and 2006/2007 corn farm prices ranged between 1.50 - 3.00 per bushel.
2) Margins at Monsanto have been outstanding to say the least.
3) When you plot prices of assets what you are doing is looking at their "relationship", or correlation between them, intended or not. You suggested that I do this, which I have been doing over the years.
You are most likely long the stock. This can create "confirmation biases" at times. Either way, without divergent opinion the would be no one to buy or sell to. Thanks for the comment(s).
Monsanto Q2 Earnings In Full Bloom - What's Wrong With The Stock? [View article]
Medscape, thanks for reading the article. My primary reason is valuation, which I explain about following my comments on the news pieces. The news pieces represent regulatory risk/potential contingent liabilities in my view.
Correlations are something I track very closely and on a daily basis. The correlation between corn and Monsanto over the most recent 45 days is a statistically insignificant 0.16. Monsanto's correlation with corn over the last 60 months is 0.19, also statistically insignificant. These are things I track continuously.
In fact, over the short term (last 45 trading days) the entire industry is a bit lost in terms of price drivers. Thanks again for reading the article.
Agrium's Acquisition Of Viterra's Retail Business Adds More Accretive Earnings [View article]
Iooman, thanks for reading the article. Agrium will hold a minority interest, while that will allow them significant influence in the boardroom. However, this is not like Canpotex where there are preset sales allocations.
Agrium will include their share (34%) of income in their consolidated financial statements while CF industries deducts the non-controlling interests percentage of earnings from their income statement.
Mosaic 3Q Earnings Preview: How Did Fertilizer Slowdown Impact Earnings? [View article]
One of the reasons Natural Gas prices rose so high in the prior decade was due to a high level of industrial production that required natural gas as an input during the period. Now supply has expanded far beyond our current needs.
However, its not possible to look at natural gas prices and determine a specific cost savings due to the use of derivatives by the fertilizer companies for certain quantities of natural gas over certain periods. I am going to address this issue in more detail in the short-term. I'll message you when it's complete.
Mosaic 3Q Earnings Preview: How Did Fertilizer Slowdown Impact Earnings? [View article]
Hi Newell, thanks for reading the piece. Natural gas is an input cost that is favorable for fertilizer companies right now and will most likely remain so for the foreseeable future.
Is Record Decline In Global Soybean Production Bullish For Fertilizer Stocks? [View article]
I had heard about significant phosphate rock supplies in Morocco, although I am not sure of the exact number relative to the rest of the world. That's pretty interesting. Someone will be bidding for land rights or building a mine in due time I'm sure.
Is Record Decline In Global Soybean Production Bullish For Fertilizer Stocks? [View article]
farmland investments, nice to see you out in SA land again. As always thanks for reading the article.
That's an interesting point of view you have there regarding crop shortages adding to the value of farmland as well. My thinking is that crop shortages are weather dependent and for the most part only impact one or two consecutive growing seasons and therefore would not add to land values because its a temporary condition.
Is Record Decline In Global Soybean Production Bullish For Fertilizer Stocks? [View article]
Hi Rich in Quebec, thanks for reading the article and great question. You are right, the price of soybeans and its affect on a nitrogen producer like CF industries has nothing to do with growing the plant.
When I originally saw a correlation between the two I was puzzled as well. However, the little noticed but equally strong relationship with the price of soybeans is due to corn's relationship with soybean meal as an animal feed substitute. I hope this helps. Thanks again for reading this.
Could Persistently High Global Wheat Stocks Trigger A Price Correction? [View article]
kgaider, still working on corn & soybean numbers. Next month will be more meaningful for corn & soybean when the planting intention report is released at month end.
Could Persistently High Global Wheat Stocks Trigger A Price Correction? [View article]
kgaider, thanks for reading the article. The drought in South America has severely impacted corn and soybean crops, wheat is not a major South America crop. I've been writing about that issue since December. Australian flooding was a late December early January issue.
What makes a market is disagreement between to parties. Clearly on wheat, you are a bull and my analysis is somewhat bearish. Looks like we have a trade. :) Thanks again.
Soybean Production Cuts, Increased Corn Acres Puzzle Agriculture Stock Investors [View article]
At the same time I was trying to say that I understand many of the methods used to develop statistical estimates and typically, the types of people that collect & process the surveys, develop the estimates, and perform tests to ensure statistical significance are not the sort of people that have a great deal of tolerance for politics interfering with their numbers. :)
That said, there is always risk of political interference beyond their span of control and before the data is released. Other times statistical anomalies simply occur & one must wait for the strange effects to disappear.
When I find something that I don't like I contact the analysts directly and they are "usually" very friendly and responsive. Oaksprings, we are definitely on the same side. Thank you so much for your comments.
Soybean Production Cuts, Increased Corn Acres Puzzle Agriculture Stock Investors [View article]
My job as an analyst is to not take any individual or organizations word for anything, but to process & interpret all available information into an unbiased opinion of value. If I'm right more than wrong then hopefully you will continue to read my reports, if I'm not then you won't have much use for them and neither will I. :)
That said, USDA reports are based on statistical estimates like all other economic reports and are subject to the limitations inherent in all such analyses. My job is to wade through all that for you. Thanks again for reading me.
Soybean Production Cuts, Increased Corn Acres Puzzle Agriculture Stock Investors [View article]
Dealers purchase a majority of the fertilizer that a bought from producers, not farmers. When the dealers don't replenish inventories this hurts sales volumes & earnings of the producers in the short-term. This is why stocks in the group have behaved so erratically over the short-term and not traded with crop prices as they do when the supply chain is functioning normally.
Many investors have wondered why the stocks have moved this way over the short-term and this is the answer. Thanks again.
Monsanto Q2 Earnings In Full Bloom - What's Wrong With The Stock? [View article]
Crop prices have not risen at a constant rate alongside the rate of inflation. A little less than half of the increase in crop prices is the result of a weakening dollar which began in 2000. As I wrote in my earlier comment, the farm price of corn has only recently risen to these levels $6.00 - $7.00 bushel (since 2006/2007).
I like your response though. :) A lot of people in the twittersphere are confused about the stocks movement today. It takes time to determine if one is ultimately right or wrong.
Monsanto Q2 Earnings In Full Bloom - What's Wrong With The Stock? [View article]
Price movement in the agricultural chemicals sector as a whole should clear once the fertilizer demand picture clears up. Thanks again, I've enjoyed the back and forth. :)
Monsanto Q2 Earnings In Full Bloom - What's Wrong With The Stock? [View article]
2) Margins at Monsanto have been outstanding to say the least.
3) When you plot prices of assets what you are doing is looking at their "relationship", or correlation between them, intended or not. You suggested that I do this, which I have been doing over the years.
You are most likely long the stock. This can create "confirmation biases" at times. Either way, without divergent opinion the would be no one to buy or sell to. Thanks for the comment(s).
Monsanto Q2 Earnings In Full Bloom - What's Wrong With The Stock? [View article]
Correlations are something I track very closely and on a daily basis. The correlation between corn and Monsanto over the most recent 45 days is a statistically insignificant 0.16. Monsanto's correlation with corn over the last 60 months is 0.19, also statistically insignificant. These are things I track continuously.
In fact, over the short term (last 45 trading days) the entire industry is a bit lost in terms of price drivers. Thanks again for reading the article.
Agrium's Acquisition Of Viterra's Retail Business Adds More Accretive Earnings [View article]
Agrium will include their share (34%) of income in their consolidated financial statements while CF industries deducts the non-controlling interests percentage of earnings from their income statement.
Thanks again for reading the article.
Mosaic 3Q Earnings Preview: How Did Fertilizer Slowdown Impact Earnings? [View article]
However, its not possible to look at natural gas prices and determine a specific cost savings due to the use of derivatives by the fertilizer companies for certain quantities of natural gas over certain periods. I am going to address this issue in more detail in the short-term. I'll message you when it's complete.
Mosaic 3Q Earnings Preview: How Did Fertilizer Slowdown Impact Earnings? [View article]
Is Record Decline In Global Soybean Production Bullish For Fertilizer Stocks? [View article]
Is Record Decline In Global Soybean Production Bullish For Fertilizer Stocks? [View article]
That's an interesting point of view you have there regarding crop shortages adding to the value of farmland as well. My thinking is that crop shortages are weather dependent and for the most part only impact one or two consecutive growing seasons and therefore would not add to land values because its a temporary condition.
I'd love to read more about your idea.
Is Record Decline In Global Soybean Production Bullish For Fertilizer Stocks? [View article]
When I originally saw a correlation between the two I was puzzled as well. However, the little noticed but equally strong relationship with the price of soybeans is due to corn's relationship with soybean meal as an animal feed substitute. I hope this helps. Thanks again for reading this.
Could Persistently High Global Wheat Stocks Trigger A Price Correction? [View article]
Here is a link to my most recent articles on corn.
January
http://seekingalpha.co...
February
http://seekingalpha.co...
I am also closely following the La Nina drought conditions at the Mays Report blog.
Could Persistently High Global Wheat Stocks Trigger A Price Correction? [View article]
What makes a market is disagreement between to parties. Clearly on wheat, you are a bull and my analysis is somewhat bearish. Looks like we have a trade. :) Thanks again.