Seeking Alpha
  • Today - Wednesday, April 1, 2015

  • 11:59 AM
    • At its investor day yesterday in Toronto, Teck Resources (TCK -0.3%) indicated that its board would wait until May or even June to decide on what to do with its dividend, disappointing some investors who were expecting an April decision.
    • TCK is suggesting that "in the absence of better commodity prices, it would likely cut the dividend, but not in April,” Canaccord analyst Gary Lampard says.
    • Other analysts agree that a dividend cut is likely; Tom Meyer of CIBC thinks the prudent thing to do is cut the dividend to $0.40/share annually from the current $0.90.
    • TCK’s current dividend yield is 4.6% - nowhere near the highs of more than 7% late last year but still relatively high for a growth-oriented mining company.
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  • 11:44 AM
    • Goldcorp (GG +3.7%) says its Eleonore mine in Quebec has achieved commercial production and is expected to produce 290K-330K oz. of gold this year, with production weighted towards H2.
    • For accounting purposes, GG says it will begin recognizing revenues from the sale of gold and mine operating costs in its consolidated statement of earnings effective April 1.
  • 8:52 AM
    • Monsanto (NYSE:MON) -0.6% premarket after missing expectations for FQ2 earnings and revenues on weakness in both its seeds and genomics and agricultural productivity businesses.
    • MON says current guidance for FY 2015 EPS is trending at the lower end of its previously forecast $5.75-$6.00 range and below the $5.84 analyst consensus estimate, as a strengthening U.S. dollar erodes sales abroad; MON says the negative effect of currency moves would reduce EPS by $0.35-$0.40.
    • FQ2 corn seed and trait sales fell 15% Y/Y to $2.91B, but MON says it remains on track to hold or grow its branded corn-share footprint in every major market despite the decline in acres of corn being planted.
    • Soybean seed and traits sales rose 7.7% to $883M; sales in the agricultural productivity business, which consists of crop-protection products and herbicides, fell 14% to $1.02B.
  • Tuesday, March 31, 2015

  • 6:52 PM
    • The EPA says it will place new restrictions on glyphosate, the key ingredient in Monsanto's (NYSE:MON) popular Roundup weed killer, to help address the rapid expansion of weeds resistant to the chemical.
    • The EPA is not yet giving specifics of the plan, but Reuters says the requirements will be similar to those placed on a new herbicide product developed by Dow Chemical (NYSE:DOW), which included weed monitoring, farmer education and remediation plans.
    • The EPA's action comes in the wake of a finding by the World Health Organization's cancer research unit earlier this month that glyphosate is probably carcinogenic to humans.
  • 4:37 PM
    • Archer Daniels Midland (NYSE:ADM) pledges to curb deforestation that results from the farming of soybeans and palm trees, developing ways to trace crops it processes and make those supply chains transparent.
    • ADM - among the world's largest traders of crops - buys all of its soy and almost all of its palm oil from third parties; under the new policy, it "commits to build traceable and transparent agricultural supply chains that protect forests worldwide."
    • ADM’s move comes as global agricultural companies face pressure from environmental and consumer groups to take greater responsibility for the way their products are produced, ranging from cultivation to labor practices.
  • 3:43 PM
    • Look for continued weakness in the short term, with the price maybe bottoming out $100 per ounce below where it is today, says Metals Focus in its inaugural Gold Focus report.
    • The seers naturally trot out Asian demand as helping to save they day, but more interestingly suggest 2015 as the year the tremendous growth in supply over the past two decades comes to an end. Further, producer hedging - selling future supply today - is expected to remain flat at levels far lower than seen a few years back.
    • As for rate the start of U.S. rate hikes - widely anticipated and hurting gold's price at least in dollar terms - it could be a sell the rumor, buy the news moment for the yellow metal as punters realized the pace of hikes will be slow, with real rates remaining negative for years to come.
  • 1:08 PM
    • Corn (CORN -4%) inventories of 7.745B bushels as of March 1 are up 10.5% from a year ago and stand against trade estimates for 7.609B. Acres planted drop 1.398M from a year ago.
    • Wheat (WEAT -3.5%) stocks of 1.124B bushels are up from 1.057B a year ago and stand against estimates for 1.141B. Acres planted drop 1.648M from a year ago.
    • Soybean (SOYB +0.4%) inventories of 1.334B bushels are up from 994M a year ago and stand against estimates for 1.348B. Acres planted gain 934K from a year ago.
    • Sources: USDA, Arlan Suderman, Bloomberg
    • ETFs: JJG, GRU
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  • 12:34 PM
    • The growing probability that China will devalue its currency could prove potentially “devastating" for fertilizer stocks because global nitrogen prices would plunge instantly with ammonia following in sympathy, Scotiabank's Ben Isaacson says.
    • Potash demand destruction would be swift as Chinese farmers push back on soaring local prices required to cover unchanged U.S. dollar prices, although the phosphate market could be spared as lower-cost Chinese capacity would not be able to push non-integrated India producers off the cost curve, Isaacson says.
    • "Commodities worldwide would suffer greatly,” the analyst says, noting that Agrium (AGU -1.1%) and Mosaic (MOS -0.9%) would be the better picks if a devaluation occurs but would still suffer “first-degree burns."
    • Also: POT +0.4%, CF -1%, SQM -0.9%, IPI -0.5%.
  • 10:35 AM
    • AngloGold Ashanti (AU +1.9%) says it received an approach for the purchase of stakes in two of its mines in Mali.
    • AU says a potential buyer that meets its criteria has approached it about its 41% stake in the Sadiola mine in Mali and 40% holding in the Yatela mine, and has asked the buyer for a binding bid.
    • AU also says it is seeking a partner or buyer for the Cripple Creek & Victor mine, its only U.S. operation; Barclays has said a sale of the mine could raise $800M.
    • The miner is seeking to sell mines or share capital costs with partners in a bid to cut its $3B of debt, partly accumulated during the decade-long bull run in gold to 2011.
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  • 10:16 AM
    • J.P. Morgan tells clients to short U.S. Steel (X -2.7%), expecting the company to operate at a loss this year.
    • JPM cuts its estimated FY 2015 EPS for the company to a loss of $0.25 from its earlier outlook for a $1.57 gain, and sees FY 2016 EPS of $1.42 vs. its earlier view for $3.00.
    • The firm believes a strong dollar, weak oil prices and slowing growth in China will weigh on metals demand.
    • Also: AKS -3.6%, NUE -1.3%, STLD -2.1%, WOR -3%, CLF -3.9%, CMC -1.8%, TMST -3.9%, SCHN -1.9%.
    • Earlier: U.S. Steel to idle Minnesota plant
  • 9:14 AM
    • U.S. Steel (NYSE:X) -1.3% premarket after announcing it will temporary idle the Minntac plant, part of its Minnesota Ore Operations, effective June 1, citing ongoing operational adjustments that are the result of challenging market conditions.
    • Job losses are not specified, only that the number of employees impacted will be based upon operational and maintenance needs.
    • The company says it will continue to operate Minntac at reduced capacity in order to meet customer demand.
    | 1 Comment
  • Monday, March 30, 2015

  • 4:59 PM
    • Mosaic (NYSE:MOS) says changes to Saskatchewan's potash production tax will cost it $80M-$100M in 2015, and it expects to update all guidance, including CRT and Canadian Royalties, in its Q1 earnings release on April 30.
    • The provincial government said earlier this month that it will require potash mining companies to spread out tax deductions on capital spending over a longer period of time, in an effort to plug a C$661M ($525M) drop in revenue from lower oil prices.
    • Potash Corp. (NYSE:POT) has said the changes will hurt its 2015 pre-tax earnings by C$75M-C$100M.
    | 1 Comment
  • 4:33 PM
    • Teck Resources (NYSE:TCK) -7.3% AH after saying it is not in any type of deal discussions with Antofagasta (OTC:ANFGF), and there are no other corporate developments that justify any significant movement in its share price.
    • TCK was responding to earlier reports that the two companies were exploring a potential merger that would create one of the world's largest copper miners.
  • 3:49 PM
    • Teck Resources (TCK +10.9%) and Antofagasta (OTC:ANFGF +4.1%) are exploring a merger that would create one of the world’s largest copper producers, Bloomberg reports.
    • The mining companies reportedly have held early-stage talks, and any agreement is said to hinge on the approval of the families that control each company.
    • With a market value of ~C$11.3B, TCK is Canada’s third-largest mining group and London-listed Antofagasta has a market value of ~£7.3B ($10.8B), so a purchase of either company would be one of the mining industry’s largest deals over the past five years.
  • 3:12 PM
    • The February Prices Received Index for agricultural production, up 3.1% from the January index but 6.5% below the February 2014 index.
    • The crop production index rose 2.4% M/M to 85, while the livestock index fell 4.2% to 115.
    • Food grains -5.6% M/M and -13% Y/Y.
    • Feed grains unchanged M/M and -12% Y/Y.
    • Oilseeds -3.7% M/M and -24% Y/Y.
    • Fruits and nuts -1.6% M/M and -8.1% Y/Y.
  • 11:58 AM
    • The Canpotex North American potash consortium says it has finalized 2015 supply contracts with all of its major customers in China.
    • Canpotex says shipments to China will reach at least 1.8M metric tons, up from 1.6M in 2014, and may be as much as 2.5M metric tons, depending on supply, demand and logistics; the group does not release price terms but says the contracts are at "current competitive levels."
    • Belarusian Potash said earlier this month it signed a contract with China to sell potash for $315/ton including shipping costs, which was $10 more than last year’s price.
    • Canpotex represents Potash Corp. (POT +1.5%), Mosaic (MOS +2.6%) and Agrium (AGU +1.5%).
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  • 10:59 AM
    • Yara International (OTCPK:YARIY, OTCPK:YRAIF) hires Svein Tore Holsether, the head of Swedish aluminum products company Sapa, as its new CEO.
    • The Norwegian fertilizer maker company originally had hired Norsk Hydro CEO Svein Richard Brandtzaeg for the job, but he withdrew before taking up the post when Yara began merger talks with CF Industries last September; during the talks, Yara fired its then-CEO Joergen Ole Hasslestad and promoted Torgeir Kvidal to acting CEO.
    • Kvidal now will return to his former position of CFO.
    | Comment!
  • 10:33 AM
    • A report on Tuesday from the USDA is expected to show a 3% Y/Y rise in planted soybean acreage this spring vs. a 2% decrease for corn - the move coming as farmers deal with a 50% decline in corn prices since 2012.
    • "Economics rule," says one farmer, noting he can break even or make a small profit on beans, but would likely lose money on corn.
    • Not exactly in a bull market itself, but still at relatively lofty levels, soybeans could face some price pressure from the switch, and big speculators of late have boosted bets on a slide in bean prices. “We’ve got record large soybean stockpiles and the crops in both hemispheres this year were just enormous,” says an analyst. “It’s a perfect storm that’s starting to brew in the beans.”
    • Source: WSJ
  • 10:27 AM
    • Rio Tinto (RIO +0.4%) CEO Sam Walsh says the company's earlier proposal to Mongolia's government to restart the long-delayed Oyu Tolgoi copper mine was its "best and final offer."
    • Rio submitted the proposals to resolve outstanding issues such as a $127M tax claim that already has been cut to $30M as well as the approval of a $4B project financing package to pay for construction of phase two, which will extend the mine underground.
    • Walsh also says financing for the second phase of the project will have to be renegotiated, especially in light of volatile copper prices; he does not state a specific timeframe for when phase two could begin operations, saying Rio would first have to finalize negotiations with the government and also remobilize its workforce.
    • Rio's Turquoise Hill Resources (NYSE:TRQ) owns 66% of the $6.5B Oyu Tolgoi, with the Mongolian government holding the rest.
    | Comment!
  • 8:40 AM
    • Alcoa (NYSE:AA) +1.2% premarket after announcing it will curtail all remaining smelting capacity at its Sao Luis facility in Brazil as it continues to optimize its commodity business.
    • As a result, AA says it will take a restructuring related charge of $10M-$15M, or $0.01/share, in its Q1.
    • AA says the curtailment is in line with its earlier announcement to evaluate 500K metric tons of smelting capacity and 2.8M metric tons of refining capacity for possible curtailment, closure or sale.
    • Once the Sao Luis facility is curtailed, AA will have ~740K metric tons, or 21%, of its smelting capacity offline.
    | Comment!
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