Ag Stocks Falling as USDA Says Crop Supply Remains Robust; Goldman Still Bullish on Sector (POT, MOS, MOO)
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Rating Summary:
0 Buy, 0 Hold, 0 Sell
Rating Trend: = Flat
Today's Overall Ratings:
Up: 8 | Down: 5 | New: 26
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Ag-related stocks have tumbled today on the heels of a USDA report in which the agency estimates that crops (during the fall of last year) reached record levels. Specifically, the USDA raised its '09/'10 US corn production estimate by 230 million bushels to 13.151 billion bushels, and its soybean estimate to 3.361 billion bushels. Analysts had been looking for 12.819 billion bushels for corn and 3.337 billion bushels for soybeans. The USDA also said that wheat supplies from last year remain robust.
Traders are likly poo-pooing the above data points today as they suggest that supply is growing faster than demand, and, moving forward, production will likely slow as demand catches up. In other words, there will certainly be enough corn and soybeans to go around over next year or so.
The Market Vectors Agribusiness ETF (NYSE: MOO), aptly tickered "MOO", has fallen more than 2% today, its largest move in either direction since the 1st of December. Taking a look at some ag stocks: Potash (NYSE: POT) shares are down 4.3% to $117.65, Mosaic (NYSE: MOS) shares are down 5.7% to $62.54, Agrium (NYSE: AGU) is down 3.6% to $66.90, CF Industries (NYSE: CF is down 3.2% to $95.11 and the relative newcomer, Interpid Potash (NYSE: IPI) is down 3% to $32.08.
Analysts at Goldman Sachs (although they believe prices will be put under pressure in the near-term) are suggesting that the news "will not impact farmer's decisions to revert to normal spring fertilizer applications levels, particularly for potash." The firm said it is still bullish on the fertilizer group for 2010, citing "strong volume recovery potential and rational pricing, supported by favorable commodity prices and a return to normalcy in agronomic stewardship." Goldman said its favorite stocks in the space are Potash and Mosaic.
Traders are likly poo-pooing the above data points today as they suggest that supply is growing faster than demand, and, moving forward, production will likely slow as demand catches up. In other words, there will certainly be enough corn and soybeans to go around over next year or so.
The Market Vectors Agribusiness ETF (NYSE: MOO), aptly tickered "MOO", has fallen more than 2% today, its largest move in either direction since the 1st of December. Taking a look at some ag stocks: Potash (NYSE: POT) shares are down 4.3% to $117.65, Mosaic (NYSE: MOS) shares are down 5.7% to $62.54, Agrium (NYSE: AGU) is down 3.6% to $66.90, CF Industries (NYSE: CF is down 3.2% to $95.11 and the relative newcomer, Interpid Potash (NYSE: IPI) is down 3% to $32.08.
Analysts at Goldman Sachs (although they believe prices will be put under pressure in the near-term) are suggesting that the news "will not impact farmer's decisions to revert to normal spring fertilizer applications levels, particularly for potash." The firm said it is still bullish on the fertilizer group for 2010, citing "strong volume recovery potential and rational pricing, supported by favorable commodity prices and a return to normalcy in agronomic stewardship." Goldman said its favorite stocks in the space are Potash and Mosaic.
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