Agribusiness Investing: Forget Simon Says, Wall Street Is Playing Goldman Says
Commodities picked up right where they left off Monday, headed lower. On Tuesday, Goldman Sachs (NYSE:GS) decided to advise their clients (and the world) on where oil should be trading. The company announced an oil target of $105, which sent oil (NYSE:USO) and ag stocks lower.
Oil ended the day $3 lower at $106, near Goldman’s target. The rapid decline had an immediate effect on agribusiness stocks (NYSE:RJA).
The Rogers International Commodity ETN (NYSE:RJA), which holds a basket of 20 agricultural commodity futures contracts, closed 2.58% lower on Tuesday. The commodity basket includes everything from wheat to cocoa.
Individual companies such as Mosaic (NYSE:MOS) and Deere (NYSE:DE) held up slightly better. Mosaic shares declined 1.96%, but did persuade a federal appeals court to dismiss a preliminary injunction. The dismissal will allow the company to expand mining operations in central Florida. Mosaic is also planning to spinoff from Cargill. Deere closed 1.62% lower, but is gaining a margin of that back in late trading. The company also plans to issue $1.1 billion worth of bonds tied to equipment loans.
Monsanto (NYSE:MON) continued to rise this week by gaining 3.10% on Tuesday. It was rumored, that the world’s biggest chemical maker BASF, was going to buy out Monsanto. However, this has not been confirmed by either company, and sources familiar with the situation claims BASF has no plans to buy out the seed giant.
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Disclosure: No positions.