|The Agri-Food Value View
"Building Wealth Through Global Agri-Food Investments"
THE AGRI-FOOD VALUE VALUE
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Ned's Random Agri-Thoughts:
17 April 2017
We updated samples available in links to right.
8 April 2017
Agri-Food Price Index: 244.99
1 Week % Change: - 1.8%
4 Week % Change: - 1.7%
52 Week % Change: +15.1%
200 Day Moving Average: 225.60
52-Week High: 257.26 - 3%
52-Week Low: 193.39 +29%
Irrational Selling by Teenagers in Futures Still Causing Damage
Selling in major grains has turned near entire Agri-Food system sentiment
negative. Cash grains prices, soybeans, wheat, and corn, deeply, deeply
oversold. That over sold condition, however, may be starting to end. Our
cash prices for both corn and HRW wheat are up from two weeks ago.
Soybean trading makes no sense. USDA estimate for crop year 2017,
ends 31 August, soybean exports is 55.11mm tons. To date, soybeans
exports, actually shipped and sold but not shipped, equals 55.152mm tons.
Soybean exports already more than estimate for the year.
Also, estimate is US farmers will plant 6mm acres more of soybeans this year.
Corn acres to be down 4mm acres. Where will those 2mm acres come from?
Land that was not good for either soybean or corn is now suddenly good
land for soybeans. Doubt it.
Wonder is WASDE this week will make any sense.
U.S. equity markets have two problems: Interest rates and Syria. 47% of
Agri-Equities doing better than market so far in April. JBSAY is extremely
attractive at current price. Brazil beefgate was not the end of the world.
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25 March 2017
Published Interim Comments yesterday, 24 March
Like everyone else we are waiting for USDA
Prospective Planting report on Friday, 31st
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18 March 2017
Agri-Food Price Index: 257.26 (New 52-week High)
1 Week % Change: + 3.2%
4 Week % Change: + 4.4%
52 Week % Change: +17.5%
200 Day Moving Average: 224.20
52-Week High: 257.26
52-Week Low: 193.39 +33%
Bull Market Continues
Strength largely in animal proteins. Exception hogs and pork which are in short
seasonal flat period. Broiler and eggs both strong. Could that be some preemptive
buying on worries about bird flu?
Pessimism in grains continue to be high, and likely too pessimistic. Average
gain from 52 week lows all 18 Agri-Commidities is 35%. Even after recent
weakness in some grains, 10 of 18, 56%, have gains of more than 20%
from lows. BUT, US soybeans only up 8% and US corn up 12%.
FEAR of S.A. crops is likely too high.
After a rough start to month as funds clamored to own techology/internet stocks
Agri-Equities have been improving. However, as we note in last interim comments,
few bargains exist.
Fundamentally, ADM and BG best positioned. ADM expanding fish meal
operations in China as it continues to move business in that direction.
JBS has purchased Plumrose USA, ham and bacon, to expand US footprint,
and reported good quarter. BUT, Brazil has raided plants of JBS and BRFS
over possible bribery. JBSAY pushed down dramatically to an attractive price.
6 March 2017
Agri-Food Price Index: 242.41
1 Week % Change: - 0.1%
4 Week % Change: - 2.9%
52 Week % Change: +13.0%
200 Day Moving Average: 223.24
52-Week High: 249.69 -3%
52-Week Low: 193.39 +25%
Bull Market Continues, BUT
as we wrote in the March letter(mailed 4 March) the rise from October low
has been exceptionally strong. Characteristic of that rise and recent action
suggests that Agri-Food Price Index will consolidate in what might be called
an Elliot Wave II. That suggests consolidation of prices through something like
June/July. WASDE, due this week, should not have a lot of food for bears,
but bears will be looking for any excuse to sell. Soybeans are especially vulnerable.
U.S. cash corn continues above 200-day moving average. Our measure of
that price recently hit highest level since 2014. Question is when will our
measure of U.S. cash corn hit $4, not if.
Is the speculative bing in U.S. stocks now starting to unravel? FOMC seems
somewhat determined to raise U.S. interest rates on 15 March. That should
not be good for U.S. stocks. Agri-Equities had a good February, and past year
has been fantastic. However, given current level of valuation not many bargains.
Fundamentally, ADM and BG best positioned.
11 February 2017
Agri-Food Price Index: 245.87
1 Week % Change: - 1.5%
4 Week % Change: + 2.0%
52 Week % Change: +13.0%
200 Day Moving Average: 220.85
52-Week High: 249.69 -2%
52-Week Low: 193.39 +27%
A New Bull Market Continues Developing
Big news of the week was release of the latest WASDE. No bear food was
found in that report. Some traders had expected end of crop year soybean
inventory estimate might be reduced. It was not, and they were disappointed.
This report was the third in a row lacking bear food. We consider that a critical
change in the direction of the news. While worry over size South American harvest
continues, that a lot of U.S. grain has been sold cannot be ignored. World needs
record harvests to satisfy record demand.
U.S. cash prices look well structured. Cash soybeans joined cash wheat
and corn prices above their 200-day moving average. Now looking for further
confirmation from U.S. cash corn. Wheat and soybeans are both up more
than 20% from 52-week lows. Only corn lags, up 15%. A move by cash corn to
more than 20% up would be importang confirmation of the new bull market.
A Speculative Binge is now rampant in U.S. equity markets. In such an
environment high beta favorites are traded excessively, regardless of the
merits of current prices. All we really know is such periods of euphoria always
fail ultimately. We simply never know the reason for the failure ahead of time.
Thus far this month Agri-Equites are up 1.8% versus +1.6% for S&P 500. The
epicenter of speculation, the NASDAQ, is up 2.1%.
For the month: PAHC +14% Kubota +5% DAR +5% Wilmar +3%
24 January 2017
Agri-Food Price Index: 249.31
1 Week % Change: + 0.2%
4 Week % Change: + 6.5%
52 Week % Change: +11.1%
200 Day Moving Average: 219.52 +129.8
52-Week High: 249.31 0%
52-Week Low: 193.39 +29%
A New Bull Market Is Developing
Hoof prints of a new Agri-Commodity bull market continue to be identified.
From the October low, Agri-Food Price Index has risen by 29%. On average,
from their respective lows the 18 Agri-Commodities we follow are up 36%.
On an individual commodity basis, 13 of 18, or 72%, are more than 20%.
If we said the same things about the stock market, few would disagree
that a bull market was developing.
Two most important Agri-Commodities are soybeans and corn. They are
extremely important to the cash flow of farmers. U.S. cash soybeans
recently joined that group up more than 20%. U.S. corn prices have not, but
are up 15% from low. That is getting close. Further, U.S. cash corn recently
broke through resistance, making up the easiest path.
But, in all of this discussion remember to never forget that markets do not move
straight up. Corrections do occur naturally.
Agri-Equities were a winner in 2016, and continue to be so.
Agri-Equities are up 25% from a year ago. However, bargains are becoming
hard to find. For the month-to-date: KUB +10% Wilmar +10% SYT +9%
A web cast on Gold & Agri 21 Feb 2017
To hear web cast:
Gold & Agriculture
|PEAK FOOD: INTRO
is now the dominant trend and will
influence Agri-Foods for decades.
Read our introductory article:
Peak Food: An Introduction
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|PEAK FOOD: PART TWO
extends our discussion of Peak Food
and the implications.
Read our Part Two artiicle:
Peak Food: Part Two
|PEAK FOOD: ISLAND EARTH
continues our discussion of peak food.
Agricultural area of Earth has peaked.
Web cast on Gold & Agriculture
. On Gold & Agriculture