Wednesday, February 12, 2014

Which Companies Will Profit?

I read a little about stocks but have never been a big investor.  My state teachers retirement did that for me, much more than I would have liked.  They missed the big crashes in prices like Enron and the crash of 2008.  They missed the big surge in US farmland prices, too, even though many of us contacted them about that.  They are quoted in this article of being heavily invested in private entities.  Is this good or bad?  They have shown a 5.4% increase in return in the short term.  Agriculture probably did as well in that same period of time.

"The fact that North America will probably show very good or even record crops is giving the idea that a bigger supply of grain could generate a drop in commodity prices. Corn dropped about 40% in 2013(price, that is), so with increasing supply, we might not see prices going up. Even though farming income will be good, ultimately, future grain prices is what drives investments in agricultural equipment.

Comparisons with record sales levels make indicators look weak. Plus, since irrigation sales levels for the remainder of the fiscal year remain uncertain, the company could not be the best stock to hold for now.

Unfortunately for Deere, it is hard to foresee that a great performance of the construction and forestry division could offset a decrease in sales coming from the agricultural division, which accounts for 77% of revenues.

AGCO is in better position to profit from better crops and farmer income. Its increasing international position will also mitigate seasonal fluctuations and increase profits. Right now, it looks like the best stock to scrutinize if you want to start a position in this industry."

We are in a crazy marketplace now, everything costs too much, nothing provides great returns but we must buy inputs to stay in business.

What is your strategy this year?  It looks to me like most people, especially farmer's, are "laying low," if not living hand to mouth?

Ed Winkle


  1. Value added crops are a big deal. Seed production, white corn, nongmo beans can all make the farmer more money if he takes a little bit of time to do a little extra work.

    The cow calf guy is doing good now as long as he isn't having to buy a bunch of feed or replace lots of cows.