Friday, August 6, 2010

More Winners from Russia's Wheat Export Ban: Potash, Eagle Bulk (ADM; EGLE; POT)

After faking higher in overnight electronic trading the futures are down  22 1/2 cents at $7.9275.
A follow-up to "Who wins and who loses as wheat prices spike: Archer Daniels Midland Up Almost 6% (ADM; BG)". The three stocks mentioned are flat to down with the DJIA off 143.
From Bloomberg:
Archer Daniels, Potash, Eagle Bulk May Reap Rewards of Russia's Wheat Ban

Archer Daniels Midland Co., Potash Corp. of Saskatchewan Inc. and Eagle Bulk Shipping Inc. stand to benefit after Russia, the fifth-largest wheat grower, banned exports of the grain because of its worst drought in 50 years.

ADM, the world’s biggest grain processor, can step in to ease the shortage in Russia, Credit Suisse Group AG said. Fertilizer producers will gain from higher sales of crop nutrients to farmers, said Joe Needham, a vice president at grains processor The Andersons Inc. Cereal producers Kellogg Co. and General Mills Inc. may raise prices to pass on higher costs.

“This is good for U.S. farmers and U.S. agribusiness,” Needham said in a telephone interview. “If you ramp up production, they will have to buy seed, they will use more fertilizer and elevators will handle the grain.”
Wheat futures in Chicago surged to a 23-month high as a record heat wave in Russia is predicted to cut the country’s grain output by 28 percent from a year ago. Flooding has ruined wheat in Canada while dry weather has damaged crops in Kazakhstan, Ukraine and the European Union.

The U.S., the world’s fourth-biggest grower and largest exporter of wheat, will produce 2.2 billion bushels in the year that started June 1, the Department of Agriculture forecast July 9. That compared with a June estimate of 2.1 billion bushels.

“You have a situation unlike anything that I’ve seen in the 35 years I’ve been trading in the grain markets,” said Dennis Gartman, an economist and editor of the Gartman Letter. “This is going to be one of the great years for American agriculture probably in history. Let’s not mince words here.”...MORE