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 Post subject: Agricultural stocks
PostPosted: Wed Dec 09, 2009 11:23 pm 
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Anyone playing POT or MOS? People gotta eat and that is the bottom line...

Food tends to hold it's own (or even go up) during hard times when discretionary spending drops because people feel the need to reward themselves a little from time to time.

The Chinese middle class is still growing exponentially and they are demanding better, more diversifed food which is hurting them since they do not have the water to grow what they need right now... Brazil has the water and arable land but the soil is not nearly as rich as the US soil used to be so they need quite a bit of potash and phosphate fertilizers...

MOS is approx 64% owned by Cargill (private company), which is a good thing if you ask me, and their NAV is $68ish while they are trading around $60. they have been on a pretty good run in Dec, up from $54, so I may wait for a little pullback towards the low-mid $50's before starting to accumulate...

POT has run from $95 to over $120 since Nov 1 so I may also let it settle for a while.

The story of my stock investing life, decide on a strategy a month late...

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 Post subject: Re: Agricultural stocks
PostPosted: Thu Dec 10, 2009 3:24 am 
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Heya Coin, copied your post over from the gold thread.

Food and agriculture is one of the big themes I want to be invested in over the next 10-15 years. While I don't usually get my investment ideas from National Geographic, I posted a great article this summer on "the end of plenty" in this thread. While part of the solution will come from more agricultural innovation, to my mind it's a no-brainer that rising incomes in places like China, India and elsewhere are going to put big pressure on agriculture and food prices over the medium term.

For my part, I was in PowerShares DB Agriculture Fund (DBA) for a few months in the second half of the year, but got tired of it being rangebound and finally yanked the money as PMs took off. But I do want to get back into it and other vehicles, but haven't quite made up my mind on timing. That said though, to me this is a long play so maybe I shouldn't stick some money in and forget it about it for awhile.

Speaking of Potash (POT), I was just reading an article over at SeekingAlpha about it (see below). Mosaic (MOS) also gets a good mention, as well as Agrium (AGU) to a lesser extent. (One stock I've never liked is Monsanto (MON). Ever since I saw a 60 Minutes reportage years ago on the company and its strong-arming of mom and pop farmers, particularly with lawsuits over cross-seeding of its patent-protected seeds that probably happened due to the wind, I have been very reluctant to go into it.) Besides DBA, I'm also interested in Market Vectors Agribusiness (MOO) (though I'd have no hold my nose over its MON holdings). Commodity-wise, I'm big on sugar too, as mentioned in this thread, but unsure about the timing after its big run. Interested in any other ideas.

:FF_thinking:


Quote:
Potash Upgraded by Goldman Sachs: Get Ready for a Rebound
by: TraderMark December 07, 2009 | about: AGU / CGA / FEED / MOS / POT / SEED / YONG

About two weeks ago we noted Potash (POT) looked poised to breakout [Nov 17, 2009: Potash Could be on Verge of Breakout] over a "double top" of $106, which it began doing within hours (we started the position once that happened). So far it has been a pretty good run here, although speculators have run into the Chinese agriculture stocks: Seed Origin Agritech (SEED), Agfeed Industries (FEED), China Green Agriculture (CGA), Yongye International (YONG) et al, as they always do whenever fertilizer gets hot. Many of these type of stocks will run 50% and lose it all once the tide turns. So as long as you find a chair before the music stops, they are fun for speculative reasons.

Image

However, Potash and Mosaic (MOS) [and to lesser degree Agrium (AGU) or Intrepid Potash (IPI)] are the key ways to play my favorite subsector (outside of land itself) in agriculture - which is potash. We have, literally, a hundred posts on the subject of why potash (the nutrient) has a huge moat around it [Nov 16, 2007: Potash Expands Mine for $2 Billion] and is one of the most compelling investment ideas for a 5, 10+ year time frame, so you can click on the label for this entry or search archives by topic if you are newer to the blog (much of this was discussed in latter 2007 or first half 2008). Mosaic and Potash were 2 of our big winners from summer 2007 through summer 2008, and just about the time they hit the mainstream press was "the top" [Apr 30, 2008: Finally (A Year Late) Fertilizer Hits the Front Page of the NYTimes] [Apr 23, 2008: Potash Hits $1000 on Spot Market]. That was about the time I became very worried about the sector as very crowded which I detailed in the April 23rd piece. In retrospect, that was a correct assessment.

Also keep in mind Potash is the 3rd largest position for investing legend George Soros.

Goldman Sachs (GS) has upgraded Potash (POT) this morning and Notable Calls blog has some of the details:

* Goldman Sachs is upgrading Potash (NYSE:POT) to Buy from Neutral with a $140 price target. According to the firm the upgrade is based on an improved demand outlook for potash in 2010 both in the US and globally.
* Over the past few weeks, datapoints have confirmed returning demand and they believe POT offers the most attractive way to play a potash recovery. Goldman believes US farmers will significantly increase applications vs. significantly weak 2009 rates, and worldwide demand should pick up following the long-awaited China contract settlement.
* Finally, investor sentiment on fertilizers has improved meaningfully, yet they believe we are still in the early phase of this upcycle. Firm sees 20% potential upside to their $140 price target.

Goldman notes they want to own POT shares today for two primary reasons:

* (1) The impending China contract settlement should serve as a major catalyst for the global potash markets and fertilizer stocks. This could come as soon as this month, but we more conservatively expect a settlement by mid-February. Settlement of the China contract will give retailers and dealers’ confidence in restocking inventories throughout the supply chain.
* Given recent improved demand trends, including higher prices in the Chinese domestic markets, they believe the risk of a damaging contract settlement is diminishing. When the contract settlement finally occurs, they expect it to set off a global demand spurt as buyers will come out of the woodwork to secure potash for 2010. Buyer confidence is key to the market right now, and until the China contract settles, uncertainty remains. That said, similar to the US, Goldman believes farmers across the globe are likely to return to the market and buy potash for 2010 application.
* Recent anecdotes from their China analyst suggest that the domestic potash market in China has thawed in recent weeks and demand is pulling inventory through the supply chain. Producer inventories have fallen meaningfully, according to Goldman China analyst, and are now about 3 million mt vs. the prior estimate of an excess of 4 million mt due to inventory draw downs during the recent weeks. Accordingly, prices have recently strengthened within China—from $350/mt up to $425/mt (at the retail level) depending on quality (with Canadian potash receiving a premium).
* (2) Investors are likely underestimating the 2010 US demand recovery that could see staggering yoy percent increases in volume given the depth of the 2009 reduction and the atypically weak fall consumption levels.
* Over the past 4-5 weeks, they have spoken to many industry contacts—from farmers to producers—and sensed a critically important sentiment change within the fertilizer industry that potash demand is returning, and that fears of another decline in application rates are overblown. After spending time in the field over the last few weeks and discussions with various industry contacts, the firm ise now highly confident that farmers do not doubt the need to replenish their soil, and will do so at rational prices.

POT is the best way to gain from the 2010 potash rebound

Goldman views Potash Corp. as the best way to play a rebound in the global potash markets given its high earnings leverage to potash prices and volumes as well as being the natural large market cap choice for investors looking to gain exposure given its size and trading characteristics. Compared to Mosaic, POT has higher potash exposure; compared to Intrepid Potash, POT has a significant market cap advantage ($37bn vs. $2.5bn) as well as much lower unit production costs. They believe that POT is portfolio managers’ ideal choice for potash exposure.

Valuation, reflecting abrupt sentiment changes, can be volatile

After the recent run, which was NOT accompanied by a rise in estimates, fertilizer stocks look significantly more expensive than they did just a couple of months ago. Of course, the same can be said across the market if looking back to the March 2009 lows. Goldman notes they are conscious, however, of the role sentiment plays in these names, which can lead to seemingly stretched valuations relative to historical standards based on investor expectations for upward earnings revisions. In POT, for example, downward earnings revisions over the past three months have come hand-in-hand with higher multiples and significant stock appreciation as investors willingly look past any near-term earnings weakness and toward the rebound potential for 2010 and beyond.

Goldman's $140 target is the new Street high target for POT.

[Jan 27, 2008: Potash King Shows No Mercy]
[Oct 23, 2007: Analysts Still Doubting the Fertilizer Stocks]

Author's Disclosure: Long Potash in fund; no personal position

http://seekingalpha.com/article/176909-potash-upgraded-by-goldman-sachs-get-ready-for-a-rebound

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 Post subject: Re: Agricultural stocks
PostPosted: Thu Dec 10, 2009 5:05 am 
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I was watching POT for a while and it kind of slipped off of my radar :FF_thumbsdown: until it broke $100 and I have been waiting for an entry point under that number, but it has done nothing but go up since then....

Maybe the GS curse will bring it back down next week...

I posted something on the old board regarding all of the desirable, edible fish dying in the sea because of pollution and over fishing but I seem to remember being scoffed at (but maybe not)...

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 Post subject: Re: Agricultural stocks
PostPosted: Thu Dec 10, 2009 12:38 pm 
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Just taking a look at POT's technicals and it looks to me like it's in overbought levels. I'd wait for a correction.

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 Post subject: Re: Agricultural stocks
PostPosted: Wed Aug 18, 2010 10:55 am 
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"Potash Sector Heating Up Again"
http://www.theaureport.com/pub/na/7089

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 Post subject: Re: Agricultural stocks
PostPosted: Wed Aug 18, 2010 7:39 pm 
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It would be nice to get names of etf in agriculture.Recently I made quite well in wheat,now I am looking for interesting things like corn,sugar.The future for agribusiness is quite bright :FF_thumbsup: :FF_thumbsup:
:FF_thumbsup:

Jim Rogers should have an etf :FF_donotknow:

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 Post subject: Re: Agricultural stocks
PostPosted: Wed Aug 18, 2010 7:57 pm 
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This is what I found :FF_thinking:

http://www.etftrends.com/2010/03/6-etfs ... -recovery/

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 Post subject: Re: Agricultural stocks
PostPosted: Wed Oct 13, 2010 1:01 am 
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Ciscokid wrote:

I never really knew about the differences between ETFs and ETNs until now so thanks for sgaring the link. I really enjoyed learning about ETFs

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