Commodities: Agriculture
ELD -22.92%: sold off heavily after a solid 1H result that was overshadowed by management’s comments around the risk higher diesel prices pose to second-half margins as the Middle East conflict continues to drive volatility in oil markets.
Poultry giant Inghams plunged as much as 19% to an all-time low after downgrading its FY26 earnings due to delays in operational improvements.
Hi
there is a school of thought that says that a new Fed , falling inflation and Trump could cause US interest rates to fall. This may drop the USD and could drive commodities higher (loads of coulds and mays I know). How would you approach a potential commodity price rebound (via ETFs) ? Since Gold has already rallied, the Oil price is dysfunctional, is there ETF for base commodities such as grains, coffee , not gold precious metals etc that may allow one to follow this type of trend? which commodities would be good for consideration in this situation?
Frank
Hello Market Matters
Hi guys, just to give you something different and keep you on your toes. Hopefully you won’t be bitter over it, excuse the pun. I stumbled across the swap rate on cocoa beans. Now we all know the price went through the roof at the start of the year, but there still appears to be an issue longer term too and from what I can make out, large crops will need to be re-established which will take a couple of years to get back to full production, that is of course, if no further issues arise. How do you think the price will play out over the next year, and why would there be such a high swap rate currently? I can get ~60% on a long position for London, and ~50% for US. And finally, why is there a difference between London and US prices, surely it it can’t be that simple for a arbitrage trade.
ELD -24.42%: the agricultural services company saw shares smacked more than 20% today after providing FY24 guidance for the first time. The first half has been hit by falling sentiment in the sector on the back of El Nino, lower crop protection prices, cheap livestock prices and a slow start to the winter crop particularly in WA.
ELDs result in November exceeded many expectations; hence, the battered stock’s had plenty of room to bounce, so far well over 60% – an attractive part franked 5% yield has helped the move. Management delivered a strong bent on the result:
On the surface, ING delivered a strong 1H24 result this month, with earnings (EBITDA) up 66% to $138mn, in line with the company’s recent guidance update in late November
ELD fell -6.1% yesterday following a “Sell recommendation” from Citi, not an ideal day to deliver such a report. They initially described ELD as a “high-quality agricultural play” but they believe that the risks of drier conditions ahead could weigh heavily on ELD.
Fruit and vegetable grower/supplier CGC has endured a tough time since COVID but we believe the stocks now formed a major low. Last month we discussed how the company’s international operations were delivering strong results and we believed this is a turnaround story in the making, unfortunately at the time we were looking for dips back toward $2.50 as a low-risk entry opportunity but now the dial appears to have turned towards the stock and we have to consider being more proactive.
