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Good morning,
Markets are called to open higher this morning. This is what's happening today:
Markets are again called higher this morning as the Yen keeps on trading lower against the Dollar. The yen weakened against all of its major counterparts amid speculation the central bank will boost monetary stimulus. The weaker the Yen, the better for Japanese exports and finally an end to deflation in Japan. If you want to get exposure to Japanese companies, you can do so through 'Lyxor ETF Japan'. Lyxor ETF Japan (TOPIX) is an open-end UCITS IV compliant exchange-traded fund incorporated in France. The Fund's objective is to track the performance of the TOPIX index. It trades in Euros on Euronext Paris.
In the US, Bernanke speaks today about monetary policy before data this week that may show growth in retail sales slowed, manufacturing in the New York region failed to expand and inflation remained in check. Bernanke is giving himself an escape clause from his latest stimulus steps in case the economy finally gains momentum. He’s made his third round of quantitative easing open-ended meaning the program doesn’t have a set time frame and signaled he may adjust its pace if needed. In December, the policy-setting Federal Open Market Committee added outright Treasury purchases to its mortgage-bond buying, saying it would acquire US government debt initially at a pace of $45 billion a month on top of $40 billion in home-loan debt. The strategy gives officials maneuvering room to slow purchases if GDP expands at a more robust pace than forecast. Fed officials in December projected growth in a range of 2% to 3.2% in 2013, already more optimistic than Wall Street’s median estimate of 2.2%, based on 57 analysts in a Bloomberg survey conducted Jan. 4 to Jan. 9.
Today I'd like to speak about corn. Quoting from bloomberg, 'Corn advanced for a sixth day, the longest rally since February, after the U.S. government said stockpiles in the world’s largest grower and exporter shrank more than analysts expected because of drought and rising demand. Futures traded in Chicago climbed to $7.215 a bushel, near the highest level since Dec. 1. Wheat rose to $7.67 a bushel and soybeans gained 1.3 percent to $13.9075 a bushel.'
Two companies in the CC equity list which benefit from a rise in the corn price are Bunge and Ingredion. Bunge is a global agribusiness and food company. The Company buys, sells, stores, transports and processes oilseeds and grains to make protein meal for animal feed and edible oil products for commercial customers and consumers. Bunge also produces sugar and ethanol from sugarcane, mills wheat and corn, and sells fertilizer. Bunge is trading on a PER of 13.3x and the indicative gross dividend yielding of 1.45%. The 5 year net growth rate in the dividend was 9.52%. Bunge is trading at $74.74 and Citigroup have a price target of $105.
Ingredion refines corn and produces sweeteners and starches. The Company has customers in a wide range of industries, including the food, soft drink, brewing, pharmaceutical, corrugating, paper, and textile industries. Ingredion has Company-owned operations, joint ventures, alliances, and technical licenses in countries around the world. The company is trading on a PER of 13x and an indicative gross dividend yield of 1.53%. The 5 year net growth rate in the dividend was 18.13%. Ingredion is trading at $67.87 and Citgroup have a price target of $86/share.
Citigroup comments 'Stock Impact — Overall, the latest data continues to support our bullish thesis for Bunge as tight global crops should enhance the value of Bunge’s grain merchandising business, while strong soybean crushing margins should benefit the firm’s oilseed processing assets. Meanwhile, the current environment for corn sweeteners appears solid given good shipments of HFCS to Mexico, which supports our Buy rating on Ingredion.'
For further information on Bunge and Ingredion, contact our offices on 25688688.
Good day and happy trading!
Kristian Camenzuli
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