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nice!
URG plus another 13%
Which Uranium Stocks Can Make Money Even If Prices Go Lower?
The Fukushima nuclear emergency in Japan created a move in the uranium space that was unbelievable. Those who had shorted the uranium miners have made some money. This is the problem with growth stocks, many investors looking for a quick profit are just as quick to get out of a stock if it begins to turn to the negative.
I had told several investors that I was getting out of uranium shortly after the DOE (Department of Energy) stated it would be dumping uranium into the spot market. This wasn't because I thought this group was going to price down, but because I believed it may trend sideways for a while. It seemed like the market had priced some of these names for $100/lb. uranium. That assumption seemed to be correct as the spot market was moving up a few dollars a week. But just as the uranium market was going to take off, 1.3 million pounds hit the spot market. Rumors were that China had dumped some uranium to artificially keep the price down and, shortly after, the DOE stated it would start getting rid of its inventory. This created a bearish short term trend in this space.
Now that the Fukushima tragedy has occurred, there are several problems associated with getting into this trade. The first is the extra uranium coming to the spot market. The DOE said it would be selling 2000 tonnes of uranium per year from 2011 to 2013. The Department of Energy has approximately 58000 tonnes built up from the cold war. The reasoning for the sale was supposedly to help cover the cost of cleaning up the Portsmouth enrichment plant in Ohio. This report was bearish for the price of uranium, as it stated the price would decrease 4.9 to 8.9 from the November of 2010 price of $60.25/lb. This would place the price of uranium in the $55/lb range. The spot market didn't react very fast to the announcement, or at least as fast as I thought it would. But as of recently, the price of uranium is already trading in that range.
Many of the uranium names were bid up before Japan's earthquake and subsequent tsunami so the initial re-tracement seemed to be valuing many of the names within the realm of proper value of current long term uranium prices. At the time of the initial fall in pricing, valuation seemed correct. But after cutting many market caps in half, the selling seems overdone. Let's see what this means for the companies within this industry.
It should be noted that contrarians will buy stocks that are hated and beaten down based on long term value. But value investors may not jump into these stocks as they are too speculative. The other reason I am pessimistic is that hedge funds love to short the heck out of these types of stocks, and they may continue to do this until we have certainty with respect to the outcome for Japan.
I cannot stress enough not to buy these stocks anytime in the immediate future. I am a bit worried about the outcome in Japan, and mostly because we haven't heard anything concrete from the Japanese government as to whether it has control of the situation. The reason we haven't heard any news on this situation is because no one knows if any of damaged reactors will melt down. More recent reports have stated radioactive iodine has been found in tap water in Tokyo and other cities. Also, Japan has lost several reactors and this should create a void for uranium usage, as these reactors will probably be shut down for good.
The day after the Fukushima disaster, China immediately stated it was putting on hold the nuclear reactors it was planning to build. This may have been positioning, but it will negatively impact the price of uranium nonetheless. It is safe to say that China will have to continue its nuclear program as it seems the only long term solution to the country's uranium needs.
Looking at names in the space, we would first need to figure out which companies can produce uranium cheap enough to make a profit if uranium keeps going lower. Cameco (CCJ) isn't too worried as its legacy contracts are designed for the purpose of protecting the company from price drops in uranium. Cameco has one of the lowest production costs per pound in the industry, as its uranium concentrations are some of the highest in the industry. McArthur River concentrations are 19.53% and Cigar Lake has 17.04%.
I covered Cameco earlier this year here. Legacy contracts have protected Cameco to the downside, through some of lowest uranium prices in history, but insulates the buyer from much higher prices, generally $100/lb. It seems Cameco is getting the better deal here. Cameco is a conservative buy within this industry. If a long term bet was to be made, it should probably be with this stock. Cameco has been through more difficult times than this, such as when uranium sold at an incredible discount after the cold war.
Alka Singh was recently interviewed by The Energy Report. The interview here gave the impression that uranium stocks could have very good long term fundamentals at this price. Ms. Singh said not to buy right now because of all of the negative sentiment. She did state that names with low production costs would be the best, like Uranium Energy Corp. (UEC) and Uranium Resources Inc. (URRE). Singh thought that Denison (DNN) had higher costs and that lead her to stay away from that specific stock. She also stated that Paladin (PALAF.PK), with its signed contracts and production, was also well placed.
I analyzed Uranium Resources (URRE) here. There are several reasons to like this company. The first is that it has existing production of 1.2 million pounds per year at Crownpoint. The company has several locations that are very close to production. In February of this year, URRE stated that it will not continue to produce from one of its Texas locations as $48/lb. in production costs was too high to be profitable.
Uranium Resource has two current contracts to purchase its uranium. The first contract is with Itochu (ITOCY.PK). This contract has a floor of $37/pound and a ceiling of $43 per pound. This contract is based on the uranium spot price. Its second contract is based on the long term price of uranium with a discount. I have not been able to find its production cost per pound of uranium at this time, but the company has stated ISR can produce uranium for under $40/lb. Most of the companies within this space have costs that are between $35 and $39, when royalties and taxes are included. Analyst estimates have this company growing 20% per year for the next five years.
Uranium Energy (UEC) will have production on line in the fourth quarter of this year. Alka Singh is also partial to this stock due to contracts in place and the fact that the company is considerably closer to production than many of its competitors. I covered this stock here. It seems UEC is well positioned as it has one site ready to produce by the end of this year, and another ISR [in-situ recovery] mine coming on line soon. UEC currently has a PE of 8.39 and has the possibility of turning a profit next year. Four analysts cover this name and believe this stock will grow 81.6% this year and 828.6% next year. In the case of this stock, I would watch this name for any downgrades or reduction in the $6.89 price target. There are many opinions out there, but the analysts are the best place to start if an investment is to be made.
Denison (DNN) is another company already in production. In 2010 it produced 1.6 million pounds of uranium. The big story at Denison is its Wheeler River discovery. It is possible this find could have concentrations like Cameco's McArthur River or Cigar Lake. I wrote on Denison here. Denison is an interesting company. It produces vanadium along with uranium, which has been appreciating in price. So this stock will be somewhat insulated from the decreased price of uranium. Denison's uranium costs have decreased significantly to $38.22 per pound as of September of last year. Denison has attributed this to its conversion to ISR mining. I would guess if Wheeler River is as big as expected, this cost could decrease further. Denison is currently covered by one analyst, and they have Denison growing by a 100% next year.
Uranurz (URZ) is an ISR uranium miner in the United States. Uranerz has very low production costs. It states that its operating costs are $24/lb. If royalties and taxes are added, this cost increases to $35/lb. Uranerz will be in production phase sometime next year. The company has two contracts set, one with Excelon (EXC) and the other with an unnamed entity. I wrote an article on Uranurz here. Uranerz is covered by two analysts. This year they have Uranerz in negative growth, but next year the analysts see earnings growth of 81.2%. This company's costs are very low when compared to its ISR counterparts.
Ur-Energy (URG) is another name currently close to uranium production. Ur-Energy is on track to start producing this year. This company states that Lost Creek is feasible at the uranium price of $40 per pound. This stock has not been liked since they cut shares earlier this year. I wrote an article on this stock here.
As I said earlier, I would not buy any of these stocks until there is more clarity. If any of these names push towards a yearly low, I may start a position. The biggest worry for this sector is the announcement that nuclear reactors are being cancelled, or if countries increase regulations to the point it will take longer to get the permits to start building. No need to catch a falling dagger here, wait until uranium prices find a bottom. As these stocks will move up and down significantly on a daily basis. To decrease risk, these stocks are in several different ETFs such as URA, NLR, NUCL, and PKN.
Disclosure: I have no positions in any stocks mentioned, but may initiate a long position in DNN, URZ, UEC, URG, CCJ over the next 72 hours.
Additional disclosure: Valuation and analyst estimates are from Yahoo Finance. This is a listing of stocks to be used as a general list to study from and not a buy recommendation. The names here are highly volitile, and should be bought after studying extensively
This article is part of Seeking Alpha's daily coverage of Long & Short Ideas.
See it now, or get a daily update by email.
CYTK
Omecamtiv mecarbil and Cardiac Myosin Activation sound cool to me but it looks like they will need revenue quickly. I will watch
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Additional Information
Despite Japanese Trauma, Uranium Is Not Dead
In the face of disaster, what do government officials around the world do? Jump into action to protect us and make us feel safe of course.
France has ordered tests on all of its nuclear reactors and will make those tests available to the public.
Germany has announced the temporary closure of 7 out of their 17 nuclear plants.
United States representatives called for a moratorium on building new nuclear power plants. I assume this is because the moratorium on drilling in the Gulf has seemed to work so well.
China has imposed a suspension of new approvals and will add more inspections to existing plants.
The quick reaction by government officials around the world is almost always a complete over reaction and more political posturing than substance. This is not to make light of the continuing tragic situation in Japan, but to make the point that uranium is not dead.
I do not believe this terrible incident will have a major impact on the use and growth of nuclear power throughout the world. France is not going to suddenly start shutting down reactors that supply most of the countries energy and start importing vast amounts of coal. China currently has 25 reactors in various stages of construction and over 100 in the proposal or planning stage. While I believe Japan will take a serious look at their nuclear program, as any smart country would, they will continue to use nuclear power as a major source of energy. The United States is a bit of a wild card as we are just now getting over the incident at Three Mile Island. In additional many other parts of the world, such as India, must find solutions to their increasing energy demands.
Below are some uranium stocks that have been punished in the wake of the disaster in Japan. These stocks will be volatile while the situation in Japan plays out so be prepared to have a strong stomach if you make the plunge. It may be wise to let this situation come to a satisfactory conclusion before committing capital as trying to catch the bottom in some these higher risk stocks may cause you high levels of anxiety.
Cameco Corporation (CCJ) is a Canadian based company that explores for and produces uranium around the world. In addition, the company provides various uranium processing services and owns 31.6% of North America's largest nuclear generating station located in Ontario, Canada. The company's operations are primarily located in the U.S., Canada and Central Asia and it provides 16% of the world's mine production.
Areva CIP (ARVCF.PK) is a major player in many aspects of nuclear energy and is the largest producer in the world. However, the production group only provides 10% of revenue. The company also provides conversion and enrichment services which accounts for 31% of revenue and reactor design and construction services accounting for 38% of revenue. The company is also involved in end-of-cycle management for used fuel and in the development of other renewable energy solutions accounting for 21% of revenue.
Paladin Energy Ltd. (PALAF.PK) is a pure play uranium production company based in Australia. The company has projects in Australia, Africa and Canada. The company also has investments in two other uranium companies including Summit Resources, Ltd. (SRCSF.PK) and Deep Yellow Ltd (DYLLF.PK). The company is not currently profitable adding risk to the stock.
Dnison Mines Corp. (DNN) is a small capitalization play on an intermediate uranium producer. The company currently has three active mines in the United States as well as interests in two of only four uranium mills in North America. The company has additional exploration projects in the United States, Canada, Mongolia and Zambia. The company is not profitable, but results are much improved over 2009. The balance sheet is in good shape and the company recently closed on additional financing.
Uranium Energy Corp. (UEC) is a much higher risk play on a uranium exploration and production company. The company's projects are all located in the southwestern region of the United States. The company only recently began producing uranium and has yet to sell any of its production or turn a profit. The company's balance sheet is in good shape, but ongoing financing will likely be required.
Two other exploration-stage companies that may interest you if you can take on the risk are Uranerz Energy Corp. (URZ) and UR-Energy, Inc. (URG). Both companies are U.S. based small cap plays with uranium exploration projects in the United States.
If you are looking to diversify your uranium exposure with other materials Rio Tinto (RIO) and BHP Billiton (BHP) may be good lower risk investments. Both are large capitalization companies with very diversified mining portfolios. While the stocks have not been damaged like the pure plays on uranium, they have been knocked down in recent days. Rio Tinto produces 16% of the world uranium while BHP Billiton produces 6%.
Disclosure: I have no positions in any stocks mentioned, but may initiate a long position in CCJ, ARVCF.PK over the next 72 hours.
This article is part of Seeking Alpha's daily coverage of Stocks & Sectors.
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Speculators Push Uranium Prices Down, China Keeps Long Term Prospects Intact
http://blogs.forbes.com/afontevecchia/2011/03/14/speculators-push-uranium-prices-down-china-keeps-long-term-prospects-intact/?partner=ya
Buying Op!! Like buying BP after the spill.
The current demand for Uranium wont change.
posted by Stuffit
ah ship
Oversupply issues to plague dry bulk trade for 2011 as well
Monday, 14 March 2011 00:00
According to John Pachoulis, the President of the Hellenic Shipbrokers Association, current, as well as future oversupply problems will most likely hamper the dry bulk sector’s recovery this year as well,
with freights rates deteriorating again by the second half of 2011. Still, in the short term and at least until May, things could look a bit rosier, as this period of the year is traditionally, the strongest one of each year. As for the latest devastation in Japan, Mr. Pachoulis says that it won’t affect dry bulk trade that much.
Do you see any serious impact to the dry bulk market from the latest catastrophic events in Japan?
First of all, let me say, that our hearts and minds are with our Japanese friends who are tried by this huge devastation and loss of human lives. It’s a disaster of near biblical proportions, which no country in the world should have to face. Regarding, its impact on shipping and dry bulk trade in particular, I believe that there will be some kind of negative effect, but it most likely will be brief and short-lived. On the other hand, tanker trades and more importantly LNG trade will be affected even more, but it could be on the positive side, as Japan is hugely reliant on oil and LNG imports to sustain its huge industry. Therefore, we could see an increase of demand for those types of cargoes in the following days.
The dry bulk market has rebounded these past few days. What was the trigger factor to cause this development?
Traditionally, from the start of February and until May, when there’s the usual peak, the dry bulk market experiences its strongest months of each year. This recovery is fuelled by the beginning of the New Year in China and other Asian nations. It’s the time of year, when earlier contracts for cargoes are being fulfilled and agreements are being materialized. As a result, capesizes are always seeing a boost in demand and freight rates are heading upwards. This is what we’ve been witnessing in the market these past few days, with Capesizes loaded with iron ore for China are receiving the lion’s share of this recovery. Panamaxes are also benefiting from China’s “shopping spree” during the months of spring, with things peaking by May, when rates could be quite higher than today’s levels.
Where do you think the market will be during the second half of the year?
Well, this year, things won’t be as positive as they were for the most part of 2010. In my view, the Baltic Dry Index is very unlikely to reach last year’s highs of over 4,000 points. During the course of 2010, a total of 80 million tons of tonnage were accumulatively added to the global dry bulk fleet, with a large chunk of this extra tonnage being delivered by the end of the year. This is probably going to occur during this year as well, especially after August, when shipyards are speeding up the new buildings delivery process. Given that a very small portion of older vessels is expected to be sold for scrap, I don’t see how the market could climb to higher levels.
Do you think that this volatility of the market will continue in 2011 or will things be more stable going forward?
For sure, volatility in the market is expected to be the norm this year as well. Of course, as has been the case in recent years, it all depends on the Chinese, it’s not a secret. Global economic recovery in other important for dry bulk trade countries, hasn’t yet reached levels enough to offset the current high levels of tonnage oversupply. During this year, we’re expecting more Supramaxes to be delivered as well. These ships are of a capacity of 61,000 tons, which used to be the Panamaxe’s territory. So, as you see, it takes two older and smaller vessels, to make up for one modern one. So, as ships sizes have grown, the number of cargoes needed to be transported by a single vessel has been reduced.
Oversupply issues have plagued the dry bulk market since mid-2010. Will this be the case as well as we inch forward?
Last year, this oversupply was in a large part covered, either by newbuilding orders’ being cancelled, from China’s healthy growth and coal demand, as well as demolition activity. This was the case until October. Since then, newbuilding deliveries were multiplied, leading the market down, without any hope of recovery, as each day more and more vessels were hitting the water. So, this scenario is highly probable to occur during this year as well, as the global dry bulk orderbook is still at very high levels.
During 2010 we witnessed a strong rebound of newbuilding orders which are difficult to justify given the already huge orderbook. Are valuations really that low? What’s your opinion on the matter?
It’s true that many ship owners opted to reduce the average cost of their fleet, by taking advantage of today’s lower prices, as compared to the prices paid during the 2003-2008 boom years. Of course, at that time, ship owners earned a lot of money, a part of which were invested last year in new buildings. On the other hand, a lot of owners have undertaken big shipping loans, but it’s a positive development that banks are much more lenient and in many cases open to refinancing, because the majority of them don’t want to become ship owners. Of course, there’ve been reports of foreign banks seizing vessels and reselling them based on the debt assigned to each ship. As a result, a ship owner with enough credit and liquidity can easily build up a big fleet for a reasonable price.
New building cancellations and scrapping of older bulkers seem to be the best chance that shipping has to improve freight rates. How is each of these solutions progressing?
In order for scrapping activity to pick up, ship owners must make a strategic decision towards this direction. But, one problem lies within the fact that many of the older ships have been acquired by Chinese owners, who are still using them, due to their low operational costs, although part of those ships are being used for inland China river transportation, so they aren’t weighing that much in the ocean-going trade. Nevertheless, it will all come down to how many deliveries of new buildings will be made this year.
As far as orders’ cancellations, we’ll be better informed by the end of the year, as it’s pretty difficult to make such an assessment at the moment. Some analysts are debating about cancellation of 10% - 15% of the total orderbook, but it’s pretty difficult to estimate.
How would you characterize the current market for second hand vessels? Are asset values corresponding to current freight rates?
Although, second hand prices have come down, they are still higher than current freight rates, so they are stilling holding their ground. Of course, compared to 2010, prices have already gone down this year, by an average of 10% - 20% depending on the vessel’s type and age. In general, ship types like Supramaxes and smaller bulkers of up to 20,000 tons are holding their values better, because of the lower orderbook compared to other ship classes. After all, Supramaxes have only been around for the past 5-6 years, so it’s difficult to face oversupply issues so soon in their lifespan.
Just goes to show ya never know what The Fk is gonna happen
so I guess now the question is, "is this a buying op"?
These Stocks Could Be Significantly Impacted by Japan's Nuclear Crisis
Prior to the massive earthquake in Japan, it appeared that a nuclear renaissance was underway in the U.S. and around the world. The first new nuclear plant in many years has recently started construction in Georgia. In Tennessee, they are working to complete a nuclear plant that was started about 30 years ago. Furthermore, the Nuclear Regulatory Commission has about applications for about 20 other nuclear plants in the U.S. There hasn't been a serious nuclear disaster like Chernobyl or Three Mile Island for many years, which has led people to feel nuclear is safe. In the U.S., Europe, Asia and other parts of the world, there has been a slow but steady acceptance of nuclear power. All of that might now be up in the air.
The emergencies at several of Japan's nuclear sites could be a serious setback for the nuclear industry. Read about Japan declaring a state of emergency at many of their nuclear facilities here. Tens of thousands of people have been evacuated in areas close to nuclear facilities. Japan's nuclear crisis is bringing about fresh concerns over the safety and reliability of nuclear power and the impact has been swift across the world.
In Germany, about 40,000 people united on Saturday to protest nuclear power. German Chancellor Angela Merkel said Germany would inspect 17 nuclear facilities over renewed safety concerns. Read more about this issue in this article titled "Japan Nuclear Scare Refuels German Energy Debate" which appeared in a leading German newspaper.
In France, green groups said the nuclear crisis developing in Japan proves that nuclear energy is not safe and demanded that France stop relying on nuclear power. You can read more about the reaction in France here.
In Italy, there are new protests as well. Italy does not have any nuclear power now but the prime minister wants Italy to have nuclear power in the future. Italy had a 6.3 magnitude earthquake in 2009, which killed hundreds of people. Since Italy is in a quake zone, the plans for a nuclear future might face much more resistance.
Last but not least, Ken Courtis, the former vice chairman of Goldman Sachs (GS) Group in Asia was quoted as saying this in regards to the Japanese nuclear crisis: "A meltdown, which would cause massive immediate damage, would also set the nuclear industry back decades. This would have vast implications for the global energy equation and perforce the world economy."
Obviously, the events in Japan are going to have some effect on the perception that nuclear energy is safe because it clearly is not safe right now in Japan. There is nothing safe about having to be evacuated, having to take potassium iodide or living in fear of meltdown. Some reports say that about 200,000 people have been evacuated in Japan due to radioactivity concerns. Also, these nuclear plants are no longer reliable energy sources for a country that desperately needs power at a time like this.
Aside from the fact that a natural disaster has turned some of Japan's nuclear sites into another crisis, there are other reasons why the world may put up new resistance to nuclear power. For example: there's a good chance a terrorist group will attack a nuclear facility or hijack nuclear materials meant for a nuclear plant at some point. In 2009, Britain's Home Secretary Jacqui Smith warned that her country was at increased risk of radiological or nuclear terrorist attacks. Read more about that here.
NATO Review has a video which discusses the concerns many top officials have over the risk that nuclear materials could be used by terrorists. One concern is that spent fuel rods from nuclear plants could be stolen in countries that do not have adequate security or stable governments. You can see that video here.
In a report to Congress, investigators posing as businessmen were able to obtain a license from the Nuclear Regulatory Commission to buy nuclear material, which could have built a dirty bomb. Apparently, all it took is a few calls and faxes in about four weeks to get the license. If that can happen in the U.S., imagine how easily nuclear materials might be to obtain in other countries. You can read more about that report here.
Even the Nuclear Regulatory Commission confirms on it's website that terrorists are interested in acquiring radiological or nuclear materials to make a dirty bomb, read about that here.
It seems likely that solar will be given renewed focus to meet the world's energy needs. There have been no reports of solar panels causing a crisis in Japan or causing evacuations. Aside from that, when you see what the consequences will be if terrorist groups attack a nuclear facility or hijack nuclear materials for use in a dirty bomb, the real cost of nuclear power soars. Contrast that to the fact that a solar plant will never be an ideal target for terrorists to attack. Nor are we likely to see terrorists pursue solar materials to make a dirty bomb as they might with nuclear materials. I doubt the people in Japan think that nuclear power is so cheap compared to the alternatives right now. Natural disasters can cause devastating results to a nuclear facility but not to a solar plant or solar farm. No one has ever needed to take potassium iodide or had to evacuate the area due to a solar panel accident. The consequence of human error is potentially huge with nuclear power and materials, the cost of human error with solar power or materials is minute.
The events in the Middle East are also making us realize that solar and natural gas are energy sources that the U.S. should be pursuing. When evaluating various energy sources, it can't just be a question of what's the "cheapest" source of power today. More questions must be asked and all risks must be considered. What is the true cost to human life and the environment when there is a nuclear disaster caused by human error, terrorists, or Mother Nature? The results of a nuclear disaster are catastrophic, while the words solar and disaster don't even belong together.
All this being said, I expect the markets will show renewed interest in solar energy stocks. I believe companies related to the nuclear power industry such as uranium stocks, will be under pressure in the coming days as the perception of a nuclear renaissance is opened for debate. While I think nuclear energy will remain as one alternative to providing power, I think there is no question this is a major setback for the nuclear industry. I believe that investor interest in this sector will cool for at least awhile.
Uranium and other nuclear related stocks have enjoyed healthy gains in the past year. Below are some of the stocks that are likely to come under pressure in the coming days as the nuclear crisis makes headlines. All of these stocks are trading in the upper end of their 52 week ranges:
Denison Mines Corp. (DNN) is trading at $3.29 today. Denison is a uranium mining company. The 50 day moving average is $3.64 and the 200 day moving average is $2.34. These shares traded between $1.08 and $4.52 in the past 52 weeks.
Cameco Corporation (CCJ) shares trade at $37.38 per share. Cameco is one of the leading uranium mining companies. The 50 day moving average is $40.38 and the 200 day moving average is $31.61. These shares traded between $20.70 and $44.81 in the past 52 weeks.
Uranium Resources Inc. (URRE) is trading at $2.33 today. Uranium Resources is a uranium mining company. The 50 day moving average is $2.97 and the 200 day moving average is $1.74. These shares traded between 38 cents and $3.98 in the past 52 weeks.
Uranerz Energy (URZ) shares trade at $3.95 per share. Uranerz is a uranium mining company. The 50 day moving average is $4.73 and the 200 day moving average is $2.58. These shares traded between 87 cents and $5.93 in the past 52 weeks.
Uranium Energy Corp. (UEC) shares trade at $4.85 per share. Uranium Energy is a uranium mining company. The 50 day moving average is $5.73 and the 200 day moving average is $4.16. These shares traded between $2.11 and $7.48 in the past 52 weeks.
UR-Energy, Inc. (URG) shares trade at $2.51 per share. UR-Energy is a uranium mining company. The 50 day moving average is $2.89 and the 200 day moving average is $1.64. These shares traded between 73 cents and $3.37 in the past 52 weeks.
The spot price of uranium might be impacted as well. It could be awhile before the nuclear reactors in Japan have any need for more uranium. Uranium U308 currently trades for $66.50. You can track the price of uranium U308 here.
The data is sourced from Yahoo Finance. The information and data is believed to be accurate, but no guarantees or representations are made.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.
http://seekingalpha.com/article/258031-these-stocks-could-be-significantly-impacted-by-japan-s-nuclear-crisis?source=yahoo
any thoughts??
ress Release Source: Ur-Energy Inc. On Friday March 11, 2011, 6:06 pm EST
LITTLETON, COLORADO--(Marketwire - 03/11/11) - Ur-Energy Inc. (TSX:URE - News) (AMEX:URG - News) ("Ur-Energy" or the "Company") has determined that its previously announced short form prospectus offering of common shares will not proceed at this time.
The Company filed a preliminary short form prospectus on February 11, 2011 and, at that time, the closing of the offering was anticipated to occur on or before March 1, 2011. The Company issued a news release on March 2, 2011 to provide an update on the anticipated closing date of the offering, which was rescheduled for mid-March. The Company is working to update its continuous disclosure record, including the preparation of an updated technical report in accordance with National Instrument 43-101. As a result of the delay, the offering will not proceed at this time. The Company confirmed that, as reported in its interim financial statements for the period ended September 30, 2010, the Company's cash resources were C$34.7M.
About Ur-Energy
URG
I picked up 500 shares to start.
Bought some this AM
URG
PDAC-Nuclear industry faces looming uranium shortage
http://www.reuters.com/article/2011/03/09/canada-pdac-uranium-idUSN0924775320110309?pageNumber=1
* New projects won't come on stream in time -experts
* Major suppliers have few acquisition options
* Shortages could hurt U.S., China nuclear power programs (In U.S. dollars unless noted)
By Julie Gordon
TORONTO, March 9 (Reuters) - An expected surge in demand for uranium to fuel new reactors may go unfilled if new supply does not soon come on stream, meaning a setback for China, the United States and other countries that are increasingly relying on nuclear energy to power their economies.
While a host of uranium explorers promise to bring projects into production before a major supply crunch develops, most are overestimating their ability to deliver on schedule, industry experts say.
That could leave a vacuum for major uranium producers searching for acquisitions as the most efficient way to ramp up shipments to power utilities that use the radioactive metal to fuel reactors.
"There are juniors out there with projects that are definitely viable," said BMO Capital Markets analyst Edward Sterck. "But I think it'd be fair to say there's an awful lot of juniors who might be challenged to deliver projects on schedule."
At the Prospectors and Developers Conference (PDAC) in Toronto this week, UR-Energy (URE.TO), U308 Corp (UWE.V) and Toro Resources TRK.CD were part of a crowd of juniors touting "near production" projects. <^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^ Graphic of nuclear by country: r.reuters.com/duv48r For more stories from PDAC convention: [ID:nN02153893] ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^>
Toro is in the permitting stage and will need about A$265 million ($268 million) to build its Wiluna project in Australia. Managing Director Greg Hall admits the Australian company faces a rough road in getting the mine into production by 2013.
"These things are not fast," said Hall. "Out of those who say they're going to be in production by 2014 -- let's say there's 40 -- I reckon seven will make it."
That could leave a supply shortage that would have a ripple effect on the global economy should China, India and other Asian powerhouses fail to secure the uranium they need to meet their targets for electricity generation.
China's nuclear generation is set to triple by 2020, while India is looking to double its nuclear output.
In addition, a deal under which the United States buys downgraded weapons uranium from Russia is slated to end after 2013. Uranium from the so-called "megatonnes for megawatts" pact fuels 50 percent of the reactors in the United States.
That makes it critical to get new uranium mines online within a couple of years. But permitting problems, financing issues and a lack of management experience is hindering many projects.
In fact, BMO's Sterck said only one company is looking very attractive as a takeout or joint venture partner right now.
"The big one is Extract Resources," said Sterck. "Huge in-situ resource, grades that are appealing and in a stable country with a well defined mining code."
Extract (EXT.AX) owns the Husab project, a 257 million pound resource that borders Rio Tinto's (RIO.L) Rossing mine in the southern African nation of Namibia.
Indeed, Extract may already be in play, as a unit of China Guangdong Nuclear Power Holding Corp (CGNPC) is lining up a $1.23 billion offer for Extract's top shareholder Kalahari Minerals. Because Kalahari owns a 43 percent stake in Extract, the bid may automatically trigger a buyout of Extract under Australian takeover rules. [ID:nL3E7E82MU]
That may put pressure on Rio Tinto, the Anglo-Australian mining giant, and leading uranium producers Areva (CEPFi.PA) and Cameco (CCO.TO), to make counter-bids to take over Extract and its planned output of 15 million pounds a year.
Last year, Uranium One (UUU.TO) bid A$1.2 billion to gain control of Mantra Resources (MRU.AX), which plans to produce about 8 million pounds a year at its Mkuju River project in Tanzania.
Comparatively, UR-Energy will produce only 1 million pounds a year when it starts up in 2012.
LITTLE TO BUY
Spot uranium prices have risen from $45 a pound in mid-2010 to over $70 earlier this year, and analysts say the time is right for big uranium companies to make acquisitions. The problem is, there's little of substance left to buy.
"I do not expect a frenzy of M&A activity with uranium juniors any time soon, given the shortage of sufficiently developed projects in this space that might pique the interest of the majors," said Darryl Levitt, a Toronto-based M&A lawyer with Macleod Dixon.
Current global demand for uranium is 180 million pounds a year, of which 140 million pounds comes from mine production. The rest is filled by stockpiles and downgraded weapons-grade uranium, according to Cameco.
With China set to boost its nuclear capacity from about 11 gigawatts now to at least 80 gigawatts by 2020, it alone will need up to 60 million pounds of extra uranium a year.
The Asian superpower has already signed long-term deals with Cameco and Areva, shifting pressure on utilities in Europe, the United States and South Korea to find other sources of uranium to fuel their current and future nuclear plants.
And, with Russia set to stop selling downgraded weapons uranium, this has led some countries to start stockpiling the metal again in fear of pending shortages.
For all the warnings, some power companies still may be unprepared for the realities of the upcoming crunch, according to Paladin's Chief Executive John Borshoff.
"The utilities remain blissfully ignorant," said Borshoff last week at the BMO Global Mining Conference, "thinking that somehow, at current prices, well-meaning but totally inadequate juniors will somehow get their operations off the ground in ridiculously short-time frames."
($1=$0.99 Australian)
($1=$0.97 Canadian) (Additional Reporting by Euan Rocha; Editing by Frank McGurty and Rob Wilson)
URG
PDAC-Nuclear industry faces looming uranium shortage
http://www.reuters.com/article/2011/03/09/canada-pdac-uranium-idUSN0924775320110309?pageNumber=1
* New projects won't come on stream in time -experts
* Major suppliers have few acquisition options
* Shortages could hurt U.S., China nuclear power programs (In U.S. dollars unless noted)
By Julie Gordon
TORONTO, March 9 (Reuters) - An expected surge in demand for uranium to fuel new reactors may go unfilled if new supply does not soon come on stream, meaning a setback for China, the United States and other countries that are increasingly relying on nuclear energy to power their economies.
While a host of uranium explorers promise to bring projects into production before a major supply crunch develops, most are overestimating their ability to deliver on schedule, industry experts say.
That could leave a vacuum for major uranium producers searching for acquisitions as the most efficient way to ramp up shipments to power utilities that use the radioactive metal to fuel reactors.
"There are juniors out there with projects that are definitely viable," said BMO Capital Markets analyst Edward Sterck. "But I think it'd be fair to say there's an awful lot of juniors who might be challenged to deliver projects on schedule."
At the Prospectors and Developers Conference (PDAC) in Toronto this week, UR-Energy (URE.TO), U308 Corp (UWE.V) and Toro Resources TRK.CD were part of a crowd of juniors touting "near production" projects. <^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^ Graphic of nuclear by country: r.reuters.com/duv48r For more stories from PDAC convention: [ID:nN02153893] ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^>
Toro is in the permitting stage and will need about A$265 million ($268 million) to build its Wiluna project in Australia. Managing Director Greg Hall admits the Australian company faces a rough road in getting the mine into production by 2013.
"These things are not fast," said Hall. "Out of those who say they're going to be in production by 2014 -- let's say there's 40 -- I reckon seven will make it."
That could leave a supply shortage that would have a ripple effect on the global economy should China, India and other Asian powerhouses fail to secure the uranium they need to meet their targets for electricity generation.
China's nuclear generation is set to triple by 2020, while India is looking to double its nuclear output.
In addition, a deal under which the United States buys downgraded weapons uranium from Russia is slated to end after 2013. Uranium from the so-called "megatonnes for megawatts" pact fuels 50 percent of the reactors in the United States.
That makes it critical to get new uranium mines online within a couple of years. But permitting problems, financing issues and a lack of management experience is hindering many projects.
In fact, BMO's Sterck said only one company is looking very attractive as a takeout or joint venture partner right now.
"The big one is Extract Resources," said Sterck. "Huge in-situ resource, grades that are appealing and in a stable country with a well defined mining code."
Extract (EXT.AX) owns the Husab project, a 257 million pound resource that borders Rio Tinto's (RIO.L) Rossing mine in the southern African nation of Namibia.
Indeed, Extract may already be in play, as a unit of China Guangdong Nuclear Power Holding Corp (CGNPC) is lining up a $1.23 billion offer for Extract's top shareholder Kalahari Minerals. Because Kalahari owns a 43 percent stake in Extract, the bid may automatically trigger a buyout of Extract under Australian takeover rules. [ID:nL3E7E82MU]
That may put pressure on Rio Tinto, the Anglo-Australian mining giant, and leading uranium producers Areva (CEPFi.PA) and Cameco (CCO.TO), to make counter-bids to take over Extract and its planned output of 15 million pounds a year.
Last year, Uranium One (UUU.TO) bid A$1.2 billion to gain control of Mantra Resources (MRU.AX), which plans to produce about 8 million pounds a year at its Mkuju River project in Tanzania.
Comparatively, UR-Energy will produce only 1 million pounds a year when it starts up in 2012.
LITTLE TO BUY
Spot uranium prices have risen from $45 a pound in mid-2010 to over $70 earlier this year, and analysts say the time is right for big uranium companies to make acquisitions. The problem is, there's little of substance left to buy.
"I do not expect a frenzy of M&A activity with uranium juniors any time soon, given the shortage of sufficiently developed projects in this space that might pique the interest of the majors," said Darryl Levitt, a Toronto-based M&A lawyer with Macleod Dixon.
Current global demand for uranium is 180 million pounds a year, of which 140 million pounds comes from mine production. The rest is filled by stockpiles and downgraded weapons-grade uranium, according to Cameco.
With China set to boost its nuclear capacity from about 11 gigawatts now to at least 80 gigawatts by 2020, it alone will need up to 60 million pounds of extra uranium a year.
The Asian superpower has already signed long-term deals with Cameco and Areva, shifting pressure on utilities in Europe, the United States and South Korea to find other sources of uranium to fuel their current and future nuclear plants.
And, with Russia set to stop selling downgraded weapons uranium, this has led some countries to start stockpiling the metal again in fear of pending shortages.
For all the warnings, some power companies still may be unprepared for the realities of the upcoming crunch, according to Paladin's Chief Executive John Borshoff.
"The utilities remain blissfully ignorant," said Borshoff last week at the BMO Global Mining Conference, "thinking that somehow, at current prices, well-meaning but totally inadequate juniors will somehow get their operations off the ground in ridiculously short-time frames."
($1=$0.99 Australian)
($1=$0.97 Canadian) (Additional Reporting by Euan Rocha; Editing by Frank McGurty and Rob Wilson)
They Zigged, Time to Zag: Guidance on COOL, KERX, and CIGX
Star Scientific, Keryx Biopharmaceuticals, and Majesco Entertainment are reviewed from a technician's point of view.
By Bryan Murphy
Published: March 9, 2011 7:40:45 AM PST
http://www.smallcapnetwork.com/They-Zigged-Time-to-Zag-Guidance-on-COOL-KERX-and-CIGX/s/article/view/p/mid/1/id/1547/
Keryx Biopharmaceuticals, Inc. Announces Fourth Quarter and Year-End 2010 Financial Results
Date : 03/08/2011 @ 5:00PM
Source : PR Newswire
Stock : Keryx Biopharmaceuticals, Inc. (MM) (KERX)
Quote : 3.865 0.025 (0.65%) @ 7:22AM
Keryx Biopharmaceuticals, Inc. Announces Fourth Quarter and Year-End 2010 Financial Results
Keryx Biopharmaceuticals, Inc. (MM) (NASDAQ:KERX)
Intraday Stock Chart
Today : Tuesday 8 March 2011
Keryx Biopharmaceuticals, Inc. (Nasdaq: KERX), a biopharmaceutical company focused on the acquisition, development and commercialization of medically important pharmaceutical products for the treatment of cancer and renal disease (the "Company"), today announced its results for the fourth quarter and year ended December 31, 2010.
At December 31, 2010, the Company had cash, cash equivalents, interest receivable, and investment securities of $28.5 million, as compared to $35.9 million at December 31, 2009.
The net loss for the fourth quarter ended December 31, 2010 was $5.3 million, or $0.09 per share, compared to a net loss of $4.7 million, or $0.08 per share, for the comparable quarter in 2009, representing an increase in net loss of $0.6 million. Other research and development expenses increased by $2.6 million, as compared to the fourth quarter of 2009, principally related to the KRX-0401 (perifosine) and Zerenex Phase 3 clinical programs. The fourth quarter of 2009 included a $1.5 million one-time research and development expense related to a terminated early-stage pipeline product candidate, which accounts for the net increase in other research and development expenses of $1.1 million as compared to the fourth quarter of 2009.
The net loss for the year ended December 31, 2010, was $20.3 million, or $0.34 per diluted share, compared to net income of $10.5 million, or $0.21 per diluted share, for the year ended December 31, 2009. The change in net (loss) income was primarily attributable to a $21.6 million decrease in license revenue and a $3.6 million decrease in other revenue. License revenue in the year ended December 31, 2009 was related to an amendment to the September 2007 sublicense agreement with Japan Tobacco Inc. and Torii Pharmaceutical Co., Ltd. (JT/Torii) which eliminated the Company's significant ongoing obligations included in the original agreement ($18.0 million) and a $3.0 million milestone payment from JT/Torii earned in the first quarter of 2009. Other revenue in the year ended December 31, 2009 was primarily related to the settlement of a dispute for $3.5 million with the former licensor of Sulonex (sulodexide), in July 2009. The change in net (loss) income was also attributable to a $6.4 million increase in other research and development expenses primarily related to increased expenses for KRX-0401 (perifosine) and Zerenex, as compared to the comparable period last year, related to the Company's ongoing Phase 3 clinical development programs.
Ron Bentsur, the Company's Chief Executive Officer, commented, "Following another very exciting year, with both of our compounds entering Phase 3 development under SPA agreements with the FDA and the announcement of positive Phase 3 data on Zerenex, we expect to leverage the momentum in 2011 with the anticipated completion of our Phase 3 metastatic colorectal study. On the financial side, we believe we are sufficiently funded to realize the value inherent in our late stage compounds, which we believe represent tremendous commercial opportunities."
The Company will host an investor conference call tomorrow, Wednesday, March 9, 2011, at 8:30am EST, to discuss the Company's fourth quarter and year-end 2010 financial results and provide a business outlook for 2011.
In order to participate in the conference call, please call 1-877-869-3847 (U.S.), 1-201-689-8261 (outside the U.S.), call-in ID: KERYX. The audio recording of the conference call will be available for replay at http://www.keryx.com, for a period of 15 days after the call.
ABOUT KERYX BIOPHARMACEUTICALS, INC.
Keryx Biopharmaceuticals is focused on the acquisition, development and commercialization of medically important pharmaceutical products for the treatment of cancer and renal disease. Keryx is developing KRX-0401 (perifosine), a novel, potentially first-in-class, oral anti-cancer agent that inhibits Akt activation in the phosphoinositide 3-kinase (PI3K) pathway, and also affects a number of other key signal transduction pathways, including the JNK pathway, all of which are pathways associated with programmed cell death, cell growth, cell differentiation and cell survival. KRX-0401 has demonstrated both safety and clinical efficacy in several tumor types, both as a single agent and in combination with novel therapies. KRX-0401 is currently in Phase 3 clinical development for both refractory advanced colorectal cancer and multiple myeloma, and in Phase 1 and 2 clinical development for several other tumor types. Each of the KRX-0401 Phase 3 studies is being conducted under a Special Protocol Assessment (SPA) agreement with the FDA. Keryx is also developing Zerenex (ferric citrate), an oral, ferric iron-based compound that has the capacity to bind to phosphate and form non-absorbable complexes. The Phase 3 clinical program of Zerenex in the treatment for hyperphosphatemia (elevated phosphate levels) in patients with end-stage renal disease is being conducted pursuant to an SPA agreement with the FDA. Keryx is headquartered in New York City.
KERX Keryx Biopharmaceuticals, Inc. to Hold Conference Call on Fourth Quarter and Year End 2010 Financial Results on Wednesday, March
Date : 03/07/2011 @ 5:00PM
Source : PR Newswire
Stock : Keryx Biopharmaceuticals, Inc. (MM) (KERX)
Quote : 3.84 -0.03 (-0.78%) @ 7:22AM
Keryx Biopharmaceuticals, Inc. to Hold Conference Call on Fourth Quarter and Year End 2010 Financial Results on Wednesday, March
Keryx Biopharmaceuticals, Inc. (MM) (NASDAQ:KERX)
Intraday Stock Chart
Today : Monday 7 March 2011
Keryx Biopharmaceuticals, Inc. (Nasdaq: KERX) will hold a conference call on Wednesday, March 9, 2011 at 8:30 a.m. ET to discuss the fourth quarter and year end 2010 financial results and outlook for 2011. Ron Bentsur, Chief Executive Officer of the Company, will host the call. Keryx will announce its financial results for this period in a press release to be issued prior to the call.
In order to participate in the conference call, please call 1-877-869-3847 (U.S.), 1-201-689-8261 (outside the U.S.), call-in ID: KERYX. The audio recording of the conference call will be available for replay at http://www.keryx.com, for a period of 15 days after the call.
ABOUT KERYX BIOPHARMACEUTICALS, INC.
Keryx Biopharmaceuticals is focused on the acquisition, development and commercialization of medically important pharmaceutical products for the treatment of cancer and renal disease. Keryx is developing KRX-0401 (perifosine), a novel, potentially first-in-class, oral anti-cancer agent that inhibits Akt activation in the phosphoinositide 3-kinase (PI3K) pathway, and also affects a number of other key signal transduction pathways, including the JNK pathway, all of which are pathways associated with programmed cell death, cell growth, cell differentiation and cell survival. KRX-0401 has demonstrated both safety and clinical efficacy in several tumor types, both as a single agent and in combination with novel therapies. KRX-0401 is currently in Phase 3 clinical development for both refractory advanced colorectal cancer and multiple myeloma, and in Phase 1 and 2 clinical development for several other tumor types. Each of the KRX-0401 Phase 3 studies is being conducted under a Special Protocol Assessment (SPA) agreement with the FDA. Keryx is also developing Zerenex (ferric citrate), an oral, ferric iron-based compound that has the capacity to bind to phosphate and form non-absorbable complexes. The Phase 3 clinical program of Zerenex in the treatment for hyperphosphatemia (elevated phosphate levels) in patients with end-stage renal disease is being conducted pursuant to an SPA agreement with the FDA. Keryx is headquartered in New York City.
KERYX CONTACT:
Lauren Fischer
Director - Investor Relations
Keryx Biopharmaceuticals, Inc.
Tel: 212.531.5965
E-mail: lfischer@keryx.com
SOURCE Keryx Biopharmaceuticals, Inc.
http://www.proactivenewsroom.com/clients/
Rexahn Pharmaceuticals Granted European Patent for New Quinoxalinyl-piperazine Compounds
http://finance.yahoo.com/news/Rexahn-Pharmaceuticals-bw-129351378.html?x=0&.v=1
press Release Source: Rexahn Pharmaceuticals, Inc. On Monday February 28, 2011, 8:00 am EST
ROCKVILLE, Md.--(BUSINESS WIRE)-- Rexahn Pharmaceuticals, Inc. (NYSE Amex: RNN), a clinical stage pharmaceutical company commercializing potential best in class oncology and CNS therapeutics, today announced that the European Patent Office has granted European patent No. 1819698 to Rexahn for its novel anti-cancer quinoxalinyl-piperazine compounds.
This European patent covers several new quinoxalinyl-piperazine compounds, the process for their preparation, pharmaceutical composition, and a method for their producing an anti-proliferative effect. The patent also covers Rexahn’s pre-clinical compound RX-5902, which is currently being developed by the company and human trials are expected to start this year.
RX-5902 is an orally available new chemical entity that exhibits extremely potent anti-tumor properties in several tumors including melanoma. The compound also exhibits strong anti-proliferative activity against known anti-cancer drug-resistance cancer cells, as well as a synergistic effect with known anti-cancer drugs as demonstrated in Rexahn’s recent research article [Bioorganic & Medicinal Chemistry, 18:7966-7974, 2010].
Rick Soni, President of Rexahn, commented, “The issuance of this patent will enhance the commercial potential of RX-5902 in Europe- one of the largest markets of cancer therapeutics in the world, and further strengthens our overall global intellectual property position in oncology.”
About Rexahn Pharmaceuticals, Inc.
cool
Oil tumbles on rumors Gaddafi shot
by more than $2 a barrel in late Thursday activity on rumors
Libyan leader Muammar Gaddafi had been shot.
There was no immediate indication of where the rumor had
originated or any news report to substantiate it.
Traders also cited earlier reports that Saudi Arabia was in
talks with European refiners to make up for the loss of Libyan
crude and rumors of a possible release of U.S. emergency oil
stockpiles as weighing on oil prices.
(Reporting by New York Energy Desk)
Farmers Can't Meet Demand as Corn Stocks Drop to 1974 Low
By Jeff Wilson and Whitney McFerron - Feb 21, 2011 9:44 PM ET
The smallest corn inventories in 37 years are a sign farmers around the globe are failing to produce enough grain to meet rising consumption, even as planting expands and food prices surge.
Growers from Canada to Russia boosted annual output of wheat, rice and feed grain by 16 percent since 2000, not enough to keep up with the 20 percent gain in demand, U.S. Department of Agriculture data show. While a Bloomberg survey of 25 analysts shows the agency on Feb. 24 may forecast a 3.5 percent increase in U.S. corn planting, the government says world stockpiles will equal 15 percent of use, the lowest since 1974.
Global inventories for all grain will drop 13 percent before the next harvest, the USDA estimates. That’s the first decline since 2007, when surging food prices sparked more than 60 riots from Haiti to Egypt. Increasing demand is causing isolated food shortages and accelerating inflation in developing countries even as it boosts farmers’ incomes and shifts planting strategies.
“We need to grow a huge crop this year to meet global food needs,” said Paul Jeschke, 58, who farms 3,600 acres (1,457 hectares) near Mazon, Illinois, and plans to boost corn planting by 50 percent because the crop is as much as $200 an acre more profitable than soybeans at current prices. “The increased demand for meat and dairy is driving demand for corn and soybeans.”
Rising incomes in developing countries are boosting food prices as people eat more meat and dairy products from crop-fed livestock. U.S. subsidies are fueling demand for ethanol made from grain, while droughts and floods in 2010 damaged global harvests.
Crop Prices Surge
Grain futures rallied this month to the highest since 2008 on the Chicago Board of Trade. Corn surged 95 percent in the past year to $7.2025 a bushel as of Feb. 18, wheat jumped 71 percent to $8.5575 a bushel, and soybeans advanced 44 percent to $13.81 a bushel. Rice gained 11 percent to $15.075 per 100 pounds.
Corn probably will reach a record $8 by 2012, and may touch $10 if the U.S. crop is disrupted, said Peter Sorrentino, who helps manage $14.4 billion at Huntington Asset Advisors. Goldman Sachs Group Inc. said on Feb. 10 that soybeans will rise the most, forecasting a 16 percent increase to $16 in the next three months. Wheat futures for delivery in December, after the U.S. harvest, trade at a 72.5-cent premium to the May contract, the widest spread since 2009.
Multi-Year Trend
“People have to eat, and we have a backdrop of falling stockpiles,” Sorrentino said by telephone from Cincinnati. “Even if we have a great harvest, we’ll just be getting back to levels people can be comfortable with in terms of stockpiles. The trend is going to be for increasing prices for years to come.”
The rally is encouraging farmers to plant more this year. The USDA, at its annual Agricultural Outlook Forum on Feb. 24 in Arlington, Virginia, probably will forecast an increase in U.S. corn planting to 91.281 million acres from 88.192 million, according to the average estimate in the Bloomberg News survey. Soybean planting may be little changed at 77.274 million acres, the survey showed.
Including winter varieties already in the ground and spring crops that will be sown before June, U.S. wheat farmers will plant a total of 57.206 million acres, up 8.8 percent from a year earlier, according to the Bloomberg survey. Even with increased acres, output may drop because growers will abandon more of the crop this year after dry weather hurt yields, according to Lanworth Inc., a crop forecaster in Chicago.
Declining Global Harvest
The global grain harvest was 2.179 billion metric tons during the past season, dropping 2.4 percent from 2010 and down for a second straight year, according to USDA data. While that’s up from 1.874 billion in 2000, it’s less than the department’s 2.235 billion-ton estimate of world consumption for this year.
Inventories before the Northern Hemisphere harvests will fall to 425.72 million tons from 487.88 million a year earlier and 27 percent less than what was on hand in 2000, the USDA said.
Tighter supplies helped boost global food costs by 25 percent last year, reaching the highest ever last month, according to the United Nations. The increase has pushed 44 million more people into extreme poverty since June, and the situation may worsen unless weather conditions improve and governments avoid trade restrictions, World Bank President Robert Zoellick said Feb. 15.
Commodity Rally
Grains weren’t the only commodities to rally. Raw-sugar futures in New York rose to a 30-year high this month of 36.08 cents a pound, and cotton reached a record $2.0893 a pound on Feb. 18 after doubling in the past year. Hog futures advanced this month to the highest since at least 1986 on the Chicago Mercantile Exchange, cattle touched a record in January, and milk futures rose to a 31-month high last week.
Governments are planning investments to revive crop supplies. China will spend 12.9 billion yuan ($1.96 billion) to bolster grain production and fight drought, Premier Wen Jiabao told China Central Television on Feb. 10. Bolivia may tap its record $10 billion central bank reserves to help boost agricultural output and stockpile food staples, Finance Minister Luis Arce said.
“Corn supplies are going to be extremely tight this year,” said Loyd Brown, the president of Hertz Farm Management Inc. in Nevada, Iowa, who helps manage about 500,000 acres in nine Midwest states. “When you consider that U.S. farmers harvested the third-largest crop last year, that means this is a demand market. You have to be bullish on agriculture. Global economic growth is driving demand for improved diets, and rising populations continue to boost exports.”
Farm Exports Surge
Overseas purchases of agricultural products from the U.S., the largest exporter of corn, soybeans, wheat and cotton, probably jumped 18 percent to a record $115.81 billion in 2010, the government said last week. China became the largest market for U.S. farm goods for the first time, as shipments increased by 34 percent to $17.5 billion, the data show.
China, the world’s most populous nation, has been leading the demand. The number of people in the Asian country grew 5.3 percent in the past decade, U.S. Census Bureau data show. During that period, as the economy more than quadrupled, urban incomes tripled to 19,109 yuan in 2010 while rural incomes more than doubled to 5,919 yuan, according to the government.
Chinese Meat Demand
“As developing economies expand and the middle class becomes larger, their logical step is to improve their diets,” said Bill Lapp, a former chief economist at ConAgra Foods Inc. who is president of Advanced Economic Solutions in Omaha, Nebraska. “A significant share of that improvement is not simply more calories, but a better diet that comes from more protein and dairy consumption.”
China, the world’s largest pork consumer, boosted demand for the meat by 30 percent since 2000 to an estimated 51.59 million tons this year, while beef consumption increased 6.7 percent, according to data compiled by the U.S. Meat Export Federation in Denver.
More grain is needed in China as livestock, dairy and poultry production shifts from small, family-owned farms with pastures to bigger, more-efficient industrial operations that feed animals mostly corn or soybean meal, according to Sterling Liddell, a vice president at Rabo Agrifinance, a U.S. unit of Utrecht, Netherlands-based Rabobank Nederland NV, the world’s largest farm lender.
Grain-to-Meat
About 7 pounds (3.2 kilograms) of corn is needed to produce 1 pound of beef, and it takes 4 pounds of the grain to get a pound of pork, according to Perry Vieth, the president of Granger, Indiana-based Ceres Partners LLC, an investment fund that has bought and manages about 15,000 acres of farmland in four Midwest states.
U.S. beef exports jumped to $4.08 billion in 2010, surpassing a record set in 2003 before an outbreak of mad cow disease led to import bans by countries including Japan and South Korea, according to the Cattlemen’s Beef Promotion and Research Board in Centennial, Colorado.
Grain demand is rising worldwide. Saudi Arabia’s cereal imports may reach a record this year, the UN said Feb. 3. Algeria, Morocco, Iraq, Bangladesh, Turkey and Lebanon issued tenders to buy wheat or rice this month, as food inflation stoked political unrest that toppled governments in Tunisia and Egypt. Wheat purchases by Algeria, North Africa’s largest importer after Egypt, climbed to 1.75 million tons in January, according to Goldman Sachs.
Indonesia, Bangladesh
Rice prices have climbed to records in Indonesia, the world’s fourth-most-populous country, and in Bangladesh, the biggest buyer in South Asia, the UN reported on Feb. 3.
Bangladesh may double its rice-import target this year to cool domestic prices, as consumers and farmers hoard the grain, the nation’s Directorate General of Food said. Indonesia is considering boosting stockpiles, and has removed import duties on wheat, wheat flour, soybeans, rice and livestock feed. The European Union is suspending import duties on some cereals this week through June to ease pressure on prices.
The crop rally has been a boon to producers. On Feb. 14, the USDA forecast net-farm income in the U.S. will surge 20 percent this year to a record $94.7 billion, allowing President Barack Obama to propose a 14 percent reduction in agricultural subsidies in his 2012 budget proposal.
Farm-Supply Companies
More cash for growers means more spending on farm supplies and equipment.
In the past month, Jeffrey J. Zekauskas, an analyst at JPMorgan Chase & Co. in New York, has raised his price targets for shares of Canadian fertilizer makers Agrium Inc., based in Calgary, and Potash Corp. of Saskatchewan Inc., based in Saskatoon. Analysts at Jefferies & Co. recommended this month that investors buy farm-equipment makers Deere & Co., based in Moline, Illinois, and Agco Corp., based in Duluth, Georgia, as well as crop-chemical and seed maker DuPont Co., based in Wilmington, Delaware.
While U.S. farmers want to plant more to take advantage of higher prices, many are already using the most-productive land, and the weather over the next eight months will remain a major influence on the size of any crop, said Dan Basse, the president of AgResource Co., a farm researcher in Chicago.
“We cannot rebuild the inventory cushion in one year,” said Basse, who has been studying agricultural markets since 1979. “We have reached an acreage wall where the U.S. can no longer be the world’s pillar of exports for corn, soybeans and wheat.”
Planting Outlook
Based on data available in November, the USDA estimated last week that U.S. planting for eight major crops, including cotton, will rise 4.1 percent to 255.3 million acres this year. The 10 million-acre increase would be the largest since 1996, when changes in farm legislation halted payments to farmers to idle land. The department will update that forecast this week.
Even a corn crop of 92 million acres “will not be enough to rebuild inventories because stocks are forecast to fall to 18 days of use,” said Terry Jones, 49, who farms 7,000 acres of corn and soybeans with his brother near Williamsburg, Iowa, and 3,500 acres of corn, soybeans and wheat in eastern Oklahoma. He said he is looking to buy more cropland.
“We can plant more acres, but demand is not backing off yet,” said Jones, who plans to sow corn on 67 percent of his fields, up from 60 percent last year. “Corn futures will likely rise to new highs, even if we have good weather this year.”
Compounding tight grain supplies are declining wheat-crop conditions from Australia to the U.S., after droughts and flooding limited output last year in Russia, Ukraine and Canada. On Feb. 15, Australia cut its forecast by 1.9 percent from December after heavy rain and flooding in the east.
U.S. Wheat Crop
U.S. production of winter wheat, the most common variety, may slump 8.8 percent to 1.355 billion bushels this year as farmers abandon 22 percent of acres, up from 15 percent last year, after unusually dry weather damaged yields, crop forecaster Lanworth said in a Feb. 11 report. The crop in Kansas, the biggest U.S. producer, was in the worst condition last month since 2002, government data show.
In China, where a drought already is reducing yield prospects for wheat, unusually warm, dry weather may limit output of corn and soybeans that are planted before June and harvested by November, said Joel Widenor, the director of agricultural services at the Commodity Weather Group LLC in Bethesda, Maryland.
About 42 percent of wheat fields in China’s eight major growing provinces were hurt by a dry spell that may last into the spring, Minister of Agriculture Han Changfu said Feb. 9. The country consumes the biggest share of the world’s wheat supply at 17 percent, data from the London-based International Grains Council show.
Weather Risks
Crops in North America face the biggest risk in the northern Great Plains and into the Canadian Prairies, where unusually cool and wet conditions will delay the snow melt and lead to late-season floods that pushes back some planting, Widenor said.
The main threat in the next three months will be for Plains winter wheat, where dryness will stress crops as they exit dormancy and begin to develop grain, Widenor said. U.S. corn and soybean crops may get warmer and drier weather than normal from South Dakota to Illinois to Texas, he said.
“This has been a demand-driven bull market,” said Jim Farrell, 56, the chief executive officer of Omaha-based Farmers National Co., which manages more than 2.4 million acres on 5,000 farms in 24 states.
“I do not think we can see a big enough increase in U.S. acreage to rebuild inventories back to a comfortable cushion in one year,” he said. “It is going to take two years of good weather and good yields. There is absolutely no room for any weather problems anywhere in the world this year.”
To contact the reporters on this story: Jeff Wilson in Chicago at jwilson29@bloomberg.net; Whitney McFerron in Chicago at wmcferron1@bloomberg.net.
CLYW
No matter what the outcome of the trial there will be great trading opportunities building up to June 27th IMO
Good luck!
Silver
Sold all my HL yesterday
a few hundred more shares under 4 bucks sounds good to me.