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Ahead of the company analyst meeting tomorrow, corn is testing two-week lows. 

It was just two-weeks ago that the “street” was cutting estimates and downgrading SAFM due to higher corn prices.  Now look what is happening to corn. 

According to Farm Futures Daily, “Corn should open lower this morning, with more chart-based weakness emerging after a failed rally attempt overnight. Futures tried to bounce back at the onset of the electronic-only session, but lost ground after stock market losses in Europe deepened.  December futures are testing two-week lows below $3.65."

 

I certainly don’t expect the street to adjust estimates or ratings weekly on SAFM, but corn has a broken TAIL and a bullish TREND.  Within an industry that’s been wrecked/consolidated, broken TAIL prices are positive for producers.

We are LONG SAFM.  As we said two weeks ago, we do not agree that corn is headed much higher.  At the current prices for crude oil, Ethanol is not a concern and the bumper crop for corn will ultimately dictate the future of corn prices, which is likely lower.   Tomorrow, SAFM will be holding an analyst meeting updating the investment community on where the company is headed and on the state of the industry.  The industry dynamics are positive and SAFM is one of the best managed companies in the space.

SAFM – RAISING ESTIMATES? - safm