Monday, June 16, 2008

Corn Fallout

Yes once again corn set a new record. I personally believe we will see a double digit handle on corn before it is all said and done though it is in the speculative stage at this point. I am in at much lower prices and will let it ride though I would not be adding at these levels.

The fallout in corn sensitive stocks was massive today though all of them had major rebounds from there lows.

The meats:
Tyson - down 1.47%
Pilgrims Pride - down 8.43%
Smithfield Foods - down 5.19%
Cal-Maine Foods - down 3.16%
Inudstrias Bachoco - up 1.31% (this is the only one that bucked the trend)

The soft drink makers (who use alot of corn syrup)
Dr Pepper - down 3.89%
Coca Cola - down 2.24%
Pepsi - down 2.22%

The beer makers would be on this list also if it wasn't for all the speculation surrounding the InBev Anheuser-Busch takeover chatter.

All of these are on my watchlists. Several may be undervalued but the question is timing. I really think corn is headed higher and that these stocks will continue to take it on the head. Smithfield Foods is the largest pork slaughterhouse in the world and the largest beef slaughethouse in the United States. They are losing there shirt right now but stocker cattle and pork bellies are finally starting to rally. I am much more bullish on the actual commodity (which is very rare for me) than the companies who deal in these areas. Beef could go up 15% and these companies would still be losing money. At some point though some of these names will be worth pouncing all over.

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