Wednesday, July 23, 2014

What the Collapse of Crop Prices Means For Corporate America (DD; MON; DE; CAT)

Agriculture, being the base of pretty much every civilization since 8,000 B.C., probably bears watching.
Here's corn over the last few years via FinViz:
From Agrimoney:

DuPont highlights threat from crop price falls

DuPont restated its long-term faith in the agriculture market despite acknowledging the threat to prospects from the tumble in crop prices, particularly of corn, a key earner for its seeds business.
The chemicals-to-healthcare conglomerate, whose agriculture assets include seeds company Pioneer, is "closely watching the development of [US] corn and soybean crops, and the impact on commodity prices", said Jim Borel, executive vice-president of DuPont's agriculture division.
"Another strong harvest in North America, if realised, will continue to pressure overall economics for corn and soybean farmers.
"If the current supply dynamics persist and corn planted area remains under pressure, it will temper short-term growth rates for the agriculture segment, particularly in our seed business."
'We comprehended the trend'
Elle Kullman, the DuPont chairman and chief executive, said that the group had already taken action in response to soft corn seed sales behind a drop of 11.2% to $836m in agriculture sector operating profits in the April-to-June quarter, as announced separately on Tuesday and heralded in a profits warning last month.
"If you take a look at the restructuring charge that we announced in the second quarter, you will see an ag component on that, so obviously we comprehended the trend and are taking steps," she told investors.
DuPont announced a $263m pre-tax group restructuring charge for the quarter, of which $48m were attributed to the agriculture division.
'Committed to continued investment'
Nonetheless, Mr Borel said that DuPont retained faith in the agriculture sector, and the support to the sector's prospects for a growing world population and increasing consumer prosperity....MORE

The depression of the '30's actually began in the '20's with the collapse of grain prices. Here's wheat from way back when: