Rob Curran has this report on the recent stumbles of the market’s favored high-fliers.
Remember the rally in commodity and agricultural stocks that would never end because the world was running out of land, energy and metals, and the greatest number of newcomers were moving into the middle classes since the industrial revolution?Well, seems that was more of a second-quarter thing.
The winners of the second quarter, particularly coal and agricultural stocks, where many nimble traders took cover from the second-quarter sell-off, have flipped into the loser column in the first few sessions of the third quarter, and losses have mounted fast for some....MORE
Prudent Speculations said, two weeks ago, "Look at the calendar":
Thursday, June 26, 2008
Fertilizer Bulls Ignoring Planting Cycles
Over the last several weeks, I have read countless analyst reports, news articles and blog entries that have all tried to make the case that the earnings of the fertilizer companies are all set to soar. The investment thesis proposed by these authors revolves around surging world demand and the recent flooding in the Midwest. While the flooding has been tragic, fertilizer bulls have argued that the flooding will act as a catalyst for companies such as Monsanto (MON) and Potash Corp. (POT).
These traders are speculating that farmers will choose to replant their crops in an effort to cash in on surging commodity prices and that to achieve these results they will be forced to relay on tremendous amounts of fertilizer to ensure adequate crop yields. Given the current supply and demand imbalance in the food markets I have no doubt that the long term thesis for fertilizer stocks is correct; however, in the short term I believe that the fertilizer bulls are mistaken as they are ignoring the basic planting cycles for corn and soybeans. It is my opinion that it is simply to late for farmers to replant in an economic manner....
