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Strategies & Market Trends : Value Investing -- Ignore unavailable to you. Want to Upgrade?

To: Spekulatius who wrote (42596)	5/11/2011 12:11:37 PM
From: E_K_S	Read Replies (1) \| Respond to of 78525

Hi Clownbuck - I have been getting my Micro Brew (Glissade-Sierra Nevada) at a 25% discount to it's normal retail price (at my local Wall Green). It's the only food drop I have noticed recently. Many of my AG stocks on my new watch screen are actually down over the last two weeks. Longer term they are all higher; CAG up 14% YTD, ADM up 10% YTD, DE up 25% YTD, DD up 14% YTD and BG up 18% YTD. Food prices in general seem higher too. Even the AG equipment manufactures are up big. My thought is that it is more of a Global event w/ commodities prices much higher (and rising) over the last two years. The higher costs are moving through all of the channels and only now are we seeing higher end user food prices. The fall in the $US may also amplify the price impact here in the U.S.. I am still not convinced that my AG basket is in "value" buy territory as many of the price hikes are just passed through to the end user and there is no direct increase in bottom line profits and/or margins. The equipment manufactures and companies that bring efficiencies to this sector do gain in increased sales. Examples include EI DuPont de Nemours & Co. (DD) in their hybrid seed division and/or Deere & Company (DE) in their farm machinery. Not all of the AG companies will benefit from the increase in commodity prices. It's more about the growth from the BRIC countries. Too high of commodity prices over a sustained period could significantly impact the LT growth rates for these companies. This could result in lower overall future growth rates and ultimately lower PE's. Better values could possibly be had if the market prices in much lower future growth. EKS

To: Spekulatius who wrote (42596)	5/12/2011 10:26:12 AM
From: E_K_S	Respond to of 78525

Kraft tops food rivals in commodities fight marketwatch.com Food companies are fighting an uphill battle when it comes to overcoming elevated prices for corn and other staple ingredients, with Kraft Foods Inc. standing out as a rare example of a company covering its ballooning commodities bill. From the article:"...Kraft Foods, maker of Oreo cookies, Oscar Mayer deli meats and other well-known brands, said May 5 it was able to raise its product prices by 3.7%, enough to cover a 7% jump in input costs, which were $375 million more than the same 2010 period...." -------------------------------------------------------------------------- Kraft was able to pass their higher commodity costs through to the end user. Other food distributors/producers are looking at private label brands to juice their returns. You still must be selective in the companies you pick for the "food/Ag" play. EKS