Broker provides good oil on food
For the first time, a major sharebroking firm is producing a research report specifically for investors in the food, agriculture and beverage sectors.
For the first time, a major sharebroking firm is producing a research report specifically for investors in the food, agriculture and beverage sectors.
Forsyth Barr’s report, Farm to Fridge, covers five listed stocks: Fonterra’s Shareholders Fund (FSF), PGG Wrightson (PGW), Delegat’s Group (DGL), Sanford (SAN) and Moa (MOA), the recently listed craft brewer.
The report covers relevant information on the wider sectors in which each company is involved – dairy, livestock and meat, seafood and alcoholic beverages – and how these impact on share values.
The inaugural report focuses on the drought, saying it will have a negative effect on FSF. It says while the shortening supply of dairy output in New Zealand and Europe will result in higher prices for farmers, it will not benefit FSF unit holders.
Forsyth Barr is unusual among sharebrokers with a recommendation to reduce holdings of FSF units.
By contrast, it recommends purchase of PGG stock, saying the drought’s effect is mixed.
“We expect strong demand for seeds following burn-off conditions as soil moisture conditions improve,” it says, “but continued weakness from the livestock division and downside risk to rural supplies.”
However, the drought will be beneficial to wine company Delegat’s, which should have a higher quality harvest.
The report warns grape and bulk wine prices may soften if production reaches the record industry vintage of 285,000 tonnes in 2008, though the effects may not be as severe.
“Excessive grape supply is more likely to be better managed through this harvest than in 2008, given the industry’s proactive approach,” the report says.
The seafood section shows higher prices across the board for Sanford’s species, while those for beer are also up and wine exports are increasing.
Nevil Gibson
Wed, 27 Mar 2013
Wed, 27 Mar 2013
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Broker provides good oil on food
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