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Highlighted
Advisor

check this out

http://www.zerohedge.com/news/2014-06-26/dupont-cuts-outlook-blames-weather

 

"Today DuPont announced that the company is revising its outlook for operating earnings per share for the second quarter and full year 2014, due primarily to lower than expected quarterly performance of its Agriculture and, to a lesser extent, Performance Chemicals segments. The company expects operating earnings in the second quarter to be moderately below the $1.28 per share recorded in the same period last year [EST. $1.46].  As a result, the company is lowering its full-year outlook for operating earnings to $4.00 to $4.10 per share [EST.$4.29].

 

The revised outlook in Agriculture reflects lower than expected corn seed sales and higher than expected seed inventory write-downs. Given favorable soybean economics, soybean sales volumes in North America are higher than expected. However, the higher soybean volume will not fully offset the decline in corn volume, especially given the transition under way in the company's soybean lineup to newer, higher performing products.  The company believes this is a short-term negative trend, and there will be strong demand for its next generation soybean products. The revised outlook also reflects lower than expected crop protection herbicide sales, largely due to weather."

 

Upon reflection I'll not make a lot out of this. Since when did you see corporate management say "because we're not doing a good job."

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6 Replies
Highlighted
Veteran Advisor

Re: check this out

I have about three bins of nice, dry corn ready for long term storage. Current prices would seem to be at or below the $2 corn of ten to fifteen years ago, and holding then for $3 was usually a prudent move. Today, that would equal holding for $6 or so. With taxes deferred, and the alternative investment reward of 1.5% interest (I pulled my stock markedt holdings on Friday's close, and will wait out the summer doldrums) I can afford to sit on the golden kernals. Demand is good, cattle guys are smiling , dairy guys are happy, hog guys are buying everything on wheels or with an abstract, ethanol profits are huge, etc etc.  How long will we see $4 corn???

 

Throw in less than anticipated plantings ( think that is why the seed inventory exists??? huh????) and we should have a winning hand if we hold em.

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Highlighted
Advisor

Re: check this out

Might work but if I were doing it I don't think I'd tell anybody until after it had, just in case it didn't.

 

I see bins as a separate enterprise primarily used to capture carry and seasonal basis gain. With that and some capacity to blend it is almost always a profitable enterprise unit. Only time it isn't is when you don't keep grain in condition.

 

If it were me, I'd peddle the corn on a strong basis and not be too worried about them sitting empty for a couple of months.

 

BTW, once upon a time knew a farmer who also built bins. Back in the day you could keep beans under loan forever so he just kept building bins and putting the beans away. He sold several years worth for near $9 in the '88 drought.

 

Also knew the merchandiser who bought them- when nobody was selling he knew where there was a  hundred thou or so to be bought.

 

An interesting thing, too, is about keeping grain in condition. It is one thing that I've always regarded myself as being pretty good at and don't think it is that hard. But the merchandisers will tell you who their best friends are- and who they are will sometimes surprise you. They're the ones who always end up taking big docks come summer and the merchandises get to blend that stuff onto unit trains.

 

Also, I agree that corn will probably be higher sometime in the next twelve months but it may be lower more of the time than not.

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Highlighted
Veteran Advisor

Re: check this out

DuPont is blaming weather? Try blaming itself. Both Dow and Monsanto have new herbicide tolerant crops coming to market soon while DuPont Pioneer has nothing but unoriginal traits to offer. DuPont has been losing the seed trait battle for a while now.

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Highlighted
Veteran Advisor

Not really concerned with opinions

I sold parts of five years corn crops in the salad days of my farming career that I had bought back from govt loans and stored for double what i had invested, and bought farmland in 1991 with the profits. I hit my homerun already, and just look for a double or triple next time.

 

If I strikeout, I still have runs up on the scoreboard..

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Highlighted
Honored Advisor

Re: Not really concerned with opinions

You are a big time grain merchandiser Red, different from a farmer, but there is a lot of profit it merchandising, just look at the Big C's results.

 

The math would suggest the old $2 is now $3 or $3.60, not $4.50.

You should get your $6 in the summer of 2016 btw...just the TIMING of it.

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Highlighted
Honored Advisor

Re: check this out

I'd also like to throw in that we are planting lots of syngenta genetics, obviously through Beck's due to price and seed quality and service, but some of the A3 and A4's are fanatastic in no-till and especially stress filled years. No Mon stuff this year as it's poor disease resistance and grain quality is not worth fighting anymore. jmo Looking forward to using the Dow technology because it works against the resistance issues, but also love to support our hometown player in the global genetics biz.

 

Another thought, if times get tough, both Becks and Spectrum have some really good non-gmo corn seed that yields right with the 3xstacks. Plots of spectrum last year went over 200 with seed under $150 a bag. It is a competitive alternative for some who don't farm in 3 counties. (and can actually manage weeds like we used to have to do)

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