|The Agri-Food Value View
"Building Wealth Through Global Agri-Food Investments"
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Ned's Random Agri-Thoughts:
24 January 2015
Agri-Food Price Index: 225.8 -1% for week
Signal Oscillator: 0% (for second week) DEEPLY oversold
Appreciation of dollar, depreciation of foreign currencies, had a dramatic impact on
Agri-Commodity prices this past week. We explained this in some detail in Interim
Comments emailed out of Saturday. For example, despite the Canadian dollar price
of canola rising, U.S. dollar price of Canadian canola has fallen. That falling price is
pressuring U.S. soybean prices. In short, about 50% of
the drop by the A-F Price Index was due to the appreciating dollar.
We continue to be more positive on U.S. corn prices due to at least a 10% drop in
Brazilian and U.S. corn acreage this year.
For the week: Eggs +17% U.S. chicken prices fell 6%. Those prices rise in
anticipation of U.S. Super Bowl, a day on which massive quantities of chicken wings
are consumed. Buying for that event was completed,
and prices fell as they normally do.
On average, Agri-Equities +0.2% for month to date versus S&P 500 -0.3%. 53% of
Agri-Equities performing better than market month to date. Month to date: SPU
+15% AGU +10% We like Wilmar, DAR, AGCO, SYT, and JBS.
17 January 2015
Agri-Food Price Index: 228.12 -1.1% for week
Signal Oscillator: 0% Deeply over sold
All markets, with the exception of Gold, suffered last week. On Thursday-Friday
some improvement was observed. Eggs +5% Sugar +3% Corn and soybeans down
for week. Corn oscillator at 39% so it is not yet over sold. Generally speaking, corn
should move higher while soybeans are “price capped”.
Is the dollar rally over? The massive losses inflicted on some investors by the Swiss
change of policy might be the beginning of the end for dollar’s rally. That would help
demand for U.S. grains, where the greatest short-term surpluses exist.
Agri-Equities are down for the month to date, -1.1%, but are doing better than S&P
500, -1.9%, and the NASDAQ, -2.1%. 60% of the Agri-Equities have performed
better than the market this month. AGU +6% SYT +4% ZTS +3% BG +1%
Improved relative strength may begin to draw money to the group.
Scheduled for web cast on www.financialsurvivalnetwork.com
on Monday afternoon, 19 January
10 January 2015
Agri-Food Price Index: 230.55 +0% for week
Signal Oscillator: 3% Deeply over sold & poised to develop a buy signal.
Year end holidays had shut down activity in the Midwestern U.S. Bids had been
weak as buyers had little or no interest. That situation seemed to change on Thursday.
Agri-Food Price Index had been negative early in the week, but ended flat.
For the week: Soybeans +5% Broilers +4% Sugar +5% Beef +4%
Trade fixated on USDA WASDE to be released on Monday. Expectations are that
the report might be slightly more bullish than bearish. Monsanto reported for the
quarter ending November. Corn seed sales(in dollars) were down 12% from a
year ago on weakness in South America. That suggests the cutback in corn
acres is going to far greater than many expect, and is positive for corn prices.
But, soybean seed sales were up 48%.
Noone enjoyed the ride in the U.S. stock market last week as it
was totally driven by traders running it down, up, and down.
For month to date: Agri-Equities -1.1% S&P 500 -0.7%
AGCO +7% PAHC +3% DE +2%
27 December 2014
Agri-Food Price Index: 235.8 -1.9% for week
Oscillator, weekly, unadjusted: 0% Over sold
Signal Oscillator: 20% Over sold
Activity in Agri-Commodities essentially came to a near halt on Tuesday with the
holiday in the middle of the week. Trade that was done was done on weak bidding
making prices soften. However, this resting period was needed to completely unwind
over bought condition. Agri-Commodities are now over sold, and awaiting the new
year. Most of the decline in the index was due to eggs(-23%) as retailers will not be
buying till the new year. Now 12 weeks since U.S. corn and soybean prices bottom.
Third week with U.S. corn at $4.
Agri-Equties are generally being ignored as U.S. stock market is in a full year end
mania approaching a level of speculation that is both historic and highly risky. Month
to date Agri-Equities are down -0.9% as money to moved into high beta stocks for
year end window dressing. For month to date: AGCO +9% DE +4% BG +2%
Weakness in CALM which we have carried as extremely over valued.
That weakness in CALM may continue.
20 December 2014
Agri-Food Price Index: 240.5 -2.2% for week
Signal Oscillator: 65% Slightly over bought, but moving down.
Seasonal factors were strong this past week. Activity in all markets
lower as buyers are mostly done till the new year. For example,
U.S. cash butter -15% and eggs -14%.
However, relative strength of U.S. cash corn continues to improve. Now 11 weeks
since U.S. cash corn hit bottom. How fast it might move up is now the question.
February, when North America starts to unfreeze, will give an indication of
strength of exports. U.S. dollar beginning to be a serious problem. Teenage traders
have pushed it to an extreme, and that is starting to make U.S
Agri-Exports non competitive in some markets.
Runaway stock markets such as we had last week focus on the most
liquid stocks that can be easily run up. Agri-Equities are not part of that group.
For month to date: AGCO +7% DE +4%.
SYT is stock to look at. Has been held back by lack of Chinese approval for a GM
corn widely planted in the U.S. While official approval announcement has not been
made by China, Chinese official meeting with U.S. Secretary of Agriculture said that
approval had been granted.
Interim Comments to be sent out on Wednesday, 24 December.
13 December 2014
NEWS FLASH: U.S. cash corn moved above $4.
That move may not have been big, $4.03 on our cash market estimate, but it was
important. The $4 level was major psychological resistance. Markets had been
pushing on it, but a news catalyst was needed, and that arrived.
Ukraine’s exports of corn may be 20% less than expected due to conflict in that
nation. Prices are not going to “fly up”,
but we likely have a start on moving higher next year.
For the week, Agri-Food Price Index: 245.96 -0.1%
Signal Oscillator: 98% Over Bought
Risk in equity markets was reduced last week, particularly in the U.S. Stock markets
bulls now are on the defensive. Agri-Equities were not able to escape the selling. For
month to date, Agri-Equities: -2.8% S&P 500: -3.2% NASDAQ: -2.9%
Fundamentals for Agri-Equities should add some support relative to markets. For
example, strong volumes on high demand, improving price picture, lower oil prices,
and they are under owned. Our preferences at this time are for Wilmar, AGCO,
DAR, and SYT
Interim Comments will go out on Sunday, 14 December.
US CASH CORN PRICE BREAKTHOUGH $4
While the move was not big, $4 was important psychological resistance.
Prices will have to fight for higher levels, but the bottom is behind us.