Replies to post #10647 on The Rising Influence of Rising Affluence

[DewDiligence]

Credit Suisse likes MON for its “defensive nature” during the current bearish market in agriculture:

http://www.barrons.com/articles/monsanto-is-safe-not-fully-immune-1441169932

Their price target is $126 (recently lowered from $141). FWIW

[DewDiligence]

(MON)—US Senators press Obama on China’s ag-biotech policy:

http://precision.agwired.com/2015/09/25/senators-urge-obama-to-push-biotech-in-china/

U.S. Senators John Thune (R-S.D.) and Debbie Stabenow (D-Mich.), both members of the Senate Finance Committee and Senate Agriculture Committee, along with 42 other senators, have sent a letter to President Obama. This letter asks Obama to address the concerns of Chinese delay in accepting U.S. biotech while President Xi is in Washington D.C.

Currently, China takes forever to approve importation of new biotech crops from foreign companies. In almost every case, China’s approval for importation is the last regulatory step before a new biotech crop is launched in the US, Canada, Brazil, or Argentina (the main exporting countries for biotech crops).

[DewDiligence]

In ag-biotech, everyone is talking to everyone (except MON):

http://www.wsj.com/articles/agricultural-giants-look-to-join-forces-1446756950

Syngenta AG is discussing with DuPont Co. a potential combination with DuPont’s agriculture division, according to people familiar with the matter. DuPont is also separately discussing a potential alternative agriculture deal with Dow Chemical Co. , which is exploring a sale of its seed and pesticide unit, another person familiar with the matter said. The discussions are at an early stage and may result in no deal, the people said.

…the deal talk has clearly gathered steam since Monsanto Co. in August abandoned its effort to acquire Syngenta for as much as $46 billion after being rebuffed by the Swiss company. That deal would have created the world’s largest supplier of seeds and pesticides, but Monsanto now could face the threat of much-enlarged competitors if its rivals end up combining and it strikes no combination of its own, analysts say.

“Everyone is talking to everyone,” said Dow Chemical CEO Andrew Liveris on a conference call last month, when his company announced it is exploring deal possibilities for its agriculture division.

[DewDiligence]

TSN hits all-time high from ever-increasing demand for chicken and pork:

http://www.wsj.com/articles/tyson-aided-by-chicken-and-prepared-foods-sales-1448286776

Tyson Foods Inc. forecast another year of record profit thanks to strength in its chicken and pork operations, sending its shares soaring to an all-time high.

…The sanguine outlook came despite hurdles for Tyson in some business lines, including continued weakness in its beef operations and sluggish export markets.

… In China…Tyson may harness its packaged foods expertise to develop more consumer-focused products in China, though he said the company will continue to supply restaurants there.

I haven’t previously considered TSN a premiere ‘TGDT’ stock, but maybe I should.

Comments?

[DewDiligence]

Re: World consumption of protein foods

http://www.wsj.com/articles/how-to-satisfy-the-worlds-surging-appetite-for-meat-1449238059

Rising household incomes among rapidly growing populations of developing countries are expected to whet the world’s appetite for meat. Global meat production nearly quadrupled over the past 50 years, while the population only slightly more than doubled. Over the next 35 years the world will need to increase meat production by another two-thirds as global GDP roughly doubles, according to United Nations projections.

…Food producers face a monumental task. At current consumption rates, the world would need to generate 455 million metric tons of meat annually by 2050, when the global population is expected to reach 9.7 billion, from 7.3 billion today.

Given today’s agricultural productivity, growing the crops to feed all of that poultry, beef and other livestock would require every acre of the planet’s cropland—leaving no room for raising the grains, fruits and vegetables that humans also need.

The solution: biotechnology—i.e. increased crop yields and productivity gains in livestock breeding.

[DewDiligence]

Barron’s bullish on MON’s ‘TGDT’ vig and relatively cheap valuation:

http://www.barrons.com/articles/monsantos-shares-engineered-for-growth-1450511080

Monsanto is predicting a slingshot year for earnings—a modest pullback in the current fiscal year through August, followed by a launch into fast growth that could double earnings within three years. Management’s plan relies mostly on new products and the absence of some one-time drags on recent results, not on a sharp improvement in farm economics. Meanwhile, Monsanto shares are down 20% in 2015. Over the past five years, they have fetched an average premium of 43% to the Standard & Poor’s 500 index, relative to forward earnings estimates. Now the premium is just 5%.

The company benefits from a clear long-term demand driver: more and hungrier mouths. The world’s population, now 7.3 billion, is expected to expand by more than a billion by 2030. The global middle class by then could balloon from two billion people to five billion. Higher incomes generally bring rising demand for meat and milk, and that requires more grain.

In the rich world, there is vocal opposition to genetically modified seeds—and a lucrative trade in organic food. Realistically, however, to avoid widespread hunger or the ecological disaster of turning far more forests into farms, the world will need to steadily increase the amount of food it can grow per acre.

Quite so.

[DewDiligence]

MON—Middle-of-the-road write-up by TMF:

http://www.fool.com/investing/general/2016/01/23/monsanto-q1-hints-at-more-pain-to-come-but-value-i.aspx

Pretty good synopsis, IMO, although it omits mention of the adverse tax consequences for MON shareholders of a (revisited) tax-inversion merger with SYT.