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

To: robert b furman who wrote (53004)	12/17/2013 9:09:55 AM
From: E_K_S	Read Replies (2) \| Respond to of 78752

Hi Robert - Thanks for the report from the farm. My value premise for future fertilizer use may be off in it's timing but it appears that the market is/has started to discount the company for this fact. As fertilizer usage is cyclical and as you stated that the U.S. ethanol subside may/will be discontinued or at least reduced significantly, the market is discounting UAN's future earnings as reflected by the recent all time lows in their stock price. I have no doubt that earnings will eventually return to previous historical levels but it may take months or even years for this to occur and/or other crops will be planted that require fertilizer but perhaps not at the levels that corn uses. For me, it's like buying straw hats in the Winter for a discount so I can sell them sometime in the Summer at a much higher price. I still think that the long term demand for NG is higher with a larger amount being exported increasing significantly starting in 2016. U.S. Crude Output to Climb Toward Record by 2016, EIA Says * Pipeline exports of U.S. natural gas to Mexico will grow by 6 percent a year to 3.1 trillion cubic feet in 2040 and those to Canada by 1.2 percent to 1.4 trillion. Pipeline imports from Canada will fall 30 percent to 2.1 trillion cubic feet in 2040 from 3 trillion in 2012. It's still a guessing game as to the exact month this disruptive change in trend will occur. My long term bet is that NG will eventually rise to the long term historical World mean price level. Since UAN does not use NG as it's feedstock but "pet-coke" they should eventually benefit from the price increase in NG as competitors will now have higher production costs. My portfolio exposure is small to UAN about 0.7% but I would eventually like to build this up to a 2% position. As far as AG companies, I am looking for specific value buys in this sector. I have looked at Deere & Company (DE) -NYSE but for me it is still too expensive from a forward PE level at 12x (I may begin to nibble when their forward PE falls below 10). Maybe you can suggest some other possible AG sector value candidates. I am bullish on this sector long term simply there are more people in the world we must feed. EKS