Mr. Begleiter: Currently we are focusing our attention on the seed side of the business, given the technology-based nature of the products and reasonable market structures. We are cautious on fertilizers, owing to overcapacity in potash and phosphates.
TWST: Many of these stocks have really struggled from 2008 through much of 2009, even into this year. Would you speak broadly about the economic factors affecting this industry?
Mr. Begleiter: Agricultural shares are under pressure, in part from lower commodity prices. This is particularly true for the fertilizers producers, as the prices for their products are tied to corn, corn and crude. So the fertilizers in particular have moved with the global commodity cycle. Now there is obviously a longer-term cyclical trend for agriculture, with key drivers being more people, more disposable income, rising protein consumption in the developing world and increasing biofuel standards. However, this has been offset in the last 12 to 18 months by the global recession and the concurrent reduction in global commodity demand and prices, including fertilizer. On the seed side, we have seen some farmers trade down from the highest-priced seed offerings to some lower-priced or mid-range offerings. So far that has not hurt them, at least in North America, given some very benign growing conditions over the last couple of years.
Tickers included in this excerpt: AGU, DD, MON, MOS, POT
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