Wednesday, April 20, 2011

Caterpillar (CAT) (AGCO) (DE) (MON) Jump on Rising Wheat Prices

Shares of Caterpillar (NYSE:CAT) and AGCO (NYSE:AGCO) Deere (NYSE:DE) and Monsanto (NYSE:MON) are all trading up today on news wheat is helping farmers generate profits which should boost the bottom line of the Ag companies.

Wheat is now trading at about $8 a bushel, the highest level in three years. Poor weather conditions should help wheat to continue to rise in price over the next month or so.

Wheat exports from America are also estimated to rise by 18 percent over last year, according to a Bloomberg report.

Jefferies analyst Stephen Volkmann wrote, “Going into the winter, the US winter wheat crop condition was already well below last year, with only 47% in good/excellent condition and 17% in poor/very poor condition, compared to 63% good/excellent and 6% poor/very poor last year. With the spring thaw, this has now declined to only 36% in good/excellent condition, and 38% in poor or very poor condition. At the same time, most of the poor crops are concentrated in prime wheat producing states – Kansas, Oklahoma, Texas, and to a lesser extent, Nebraska – suggesting that the impact on yields could be larger.”

Higher crop prices provide more confidence and capital for farmers to spend on a variety of needed inputs.

Caterpillar was trading at $107.89, gaining $2.22, or 2.11 percent, as of 2:44 PM EDT. AGCO was at $53.17, up $1.35, or 2.61 percent. Deere was trading at $93.71, rising $1.33, or 2.11 percent. Monsanto was trading at $67.48, increasing $0.63, or 0.94 percent.

No comments: