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Strategies & Market Trends : Stock Attack II - A Complete Analysis -- Ignore unavailable to you. Want to Upgrade?

To: Casaubon who wrote (28028)	1/20/2002 2:37:35 PM
From: Joan Osland Graffius	Read Replies (3) \| Respond to of 52237

Casaubon >> Yeah, that's called price fixing I don't think so. If you notice when there is an over supply in "say" Soy Bean Oil you will see both Cargill and ADM close down plants. What they are doing is managing the oversupply, instead of producing more product than can be sold for cost plus a profit. For example right now there is an over supply of cocoa butter and ADM shut down plants, as it does not make sense producing more of something that they can not sell for cost of production and a reasonable profit. What this tells us is both companies are competitive with their cost of production as well as their ability to purchase future raw materials. It would make no sense for good management to continue producing a product that is in over supply just to drive the price below their cost of production. If you look at ADM's balance sheet they are not making outrageous profits on these products. I do agree that their Lysine game was price fixing, as the profits they were making on it were out of line with what one would expect in the industry. The company and its management paid a price for doing this. If you owned a lemonade stand and no one showed up to purchase the lemonade you were producing, you would quickly shut down your operation until there was a demand for your product or go broke buying lemons and sugar. <g> Joan