Jefferies: 2010 Is A Transition Year For DD, MON, SYT
According to Jefferies, “Many investors remain focused on upside risks to the supply side of the crop equation and are missing improving demand fundamentals. The USDA increased its estimate for corn usage on both higher ethanol production and food/industrial usage… Yield expectations remain high, but recent stormy weather in the midwest has increased stress on recently planted crops, which could reduce yields. After several strong yield years, we believe that the market may be overly optimistic in its yield estimates this year, suggesting that continued adverse weather could cause additional upward price volatility in the coming months.”
“With DuPont (NYSE: DD), Monsanto (NYSE: MON), and Syngenta (NYSE: SYT) vying for market share in the US, the 2010 will be a transition year. The next catalyst should be yield data releases, pricing benchmarks for 2011, and early order patterns in Latin America…. We continue to believe that farm markets are weathering the economic storm relatively better than many other industrial sub sectors, and that tight supply/demand indicates that crop prices and farmer income could rebound quickly with any economic recovery,” the analysts add.
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