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Strategies & Market Trends : Strictly: Drilling II -- Ignore unavailable to you. Want to Upgrade?

To: David Zgodzinski who wrote (15204)	7/5/2002 8:37:24 AM
From: Frank Pembleton	Read Replies (1) \| Respond to of 36161

Hi David -- I have problems trying to wrap my mind around an agricultural fund. I mean with all the farm aid, insurance, bankruptcies and government trade rules - I wouldn't know where to begin when it comes to assigning book value. It's like trying to assign bv to Ottawa and it's power of taxation. Regards, Frank P.

To: David Zgodzinski who wrote (15204)	7/5/2002 9:48:24 AM
From: Joan Osland Graffius	Read Replies (1) \| Respond to of 36161

David, I would expect the ADM's of the world would have pricing power. There are so few of these type of companies in the world today that they price in lock step with each other. It is generally their margins that increase. Their contracts are generally based on the price of the commodity and most companies in the food chain have pricing power. Companies that store grains buy and sell based on the spot market. My grocer has pricing power and his vendor has pricing power. The truckers and railroads will not increase their prices because of the price of the product. They charge by weight and mileage. Energy costs drive their pricing. Small grains can be held for years. I do not know how many farmers operate where they only sell their commodity when cash is required. My father never sold his grain unless he was going to buy something. His currency was the product he produced. Of course his generation lived through the days of bank closures and never did trust the almighty US dollar. <ggg> One company that could benefit is John Deere. The farmers that need new equipment will buy if capital is available. One fly in the ointment here is there are so many farmers that are quitting running the operation or are going bankrupt that the secondary market in machinery is more attractive than new equipment. The farmer is probably the largest beneficiary with the increase in price of these commodities. Joan