Effectively, the CME is lowering the cost to trade crude oil, gold, silver, copper, and a few other commodities. So far this has had no impact on prices of the SPDR Gold Trust (NYSE: GLD), United States Oil Fund (NYSE: USO), iShares Silver Trust (NYSE: SLV), nor in the iPath DJ-UBS Copper TR Sub-Index ETN (NYSE: JJC).

In the past, margin costs were raised on traders as an effort to curb runaway trading to the upside by making it more expensive for traders and speculators to trade energy and metals.  In short, driving up the cost of poker creates fewer gamblers. So what happens when they make it cheaper to trade?

The full details are here.

JON C. OGG

iShares MSCI Global Agriculture Producers Fund (NYSE: VEGI) targets the front end of the production chain (fertilizers or agricultural materials) while excluding exposure from companies at the end of the production chain (packaging and marketing). This is a bit similar to but nowhere near identical to the Market Vectors Agribusiness ETF (NYSE: MOO).
 
iShares MSCI Global Energy Producers Fund (NYSE: FILL) tracks the MSCI ACWI Select Energy Producers Investable Market Index.  This is similar to the ProShares Ultra Oil & Gas (NYSE: DIG), but without the leverage.

iShares MSCI Global Select Metals & Mining Producers Fund (NYSE: PICK) aims to track the MSCI ACWI Select Metals & Mining Producers Ex Gold & Silver Investable Market Index. This one is not identical to but has overlaps with the SPDR S&P Metals & Mining ETF (NYSE: XME).

iShares MSCI Global Gold Miners Fund (NYSE: RING) aims to track the MSCI ACWI Select Gold Miners Investable Market Index.  We consider this an alternative to the Market Vectors Gold Miners ETF (NYSE: GDX).

iShares MSCI Global Silver Miners Fund (NYSE: SLVP) aims to track the MSCI ACWI Select Silver Miners Investable Market Index.  We would consider its an alternative to the Global X Silver Miners ETF (NYSE: SIL).

As far as why these are different from some other ‘production’ETFs, iShares explains that these include only companies at, or near, the initial phase of production of the commodity. Investors can target the front end of the production chain instead of including the back-end of the production chain to focus on the aspects more sensitive to fluctuations in the underlying commodity price.  Companies further down the production cycle are impacted by a number of factors in addition to commodity prices.

An ETF for just about anything… now competing ETFs for many more strategies.

JON C. OGG

The Mosaic Co. (NYSE: MOS) is down by about 3.6% at $53.03 on close to 4 million shares, against a 52-week range of $44.86 to $89.24.  The larger rival and former takeover target of Potash Corp. of Saskatchewan Inc. (NYSE: POT) is down by 3.8% at $42.12 versus a 52-week range of $38.42 to $63.97.

CF Industries Holdings Inc. (NYSE: CF) is down by 3.7% at $161.00 and its 52-week trading range is $115.34 to $192.70.

Intrepid Potash Inc. (NYSE: IPI) is down the least with shares down “only 2.6%” on the day at $24.07 and against a 52-week range of $20.75 to $40.22.

Using an exchange traded fund can emphasize just how bad things are and the Market Vectors Agribusiness ETF (NYSE: MOO) is down 1.2% at $49.39 versus a 52-week range of $39.86 to $57.93.

With so much corn used in food for humans, ethanol, and animal feedstocks, corn unfortunately is a key driver for the fertilizer and potash markets. 

Sadly, things brings up the question… Just how much do the potash and fertilizer markets depend upon the taxpayer-funded farm subsidies in America?  Probably more than any of us care to think.

JON C. OGG

According to the company’s CEO,

Isolated phosphate market spot prices have become disconnected with the underlying agricultural fundamentals. As dealers and distributors focus on the macroeconomic uncertainty and delay purchases for the North American Spring Season, near term supply of phosphate barges on the Mississippi River has exceeded near-term demand. The current spot prices in this market do not reflect our outlook for the business, nor do we think they are sustainable.

The company continues to believe that believe that demand for phosphates and potash will be strong in 2012, following this period of “near-term cautious sentiment.”

The projected cuts total about 10% of Mosaic’s quarterly production.

Paul Ausick

The US Department of Agriculture is forecasting a global corn crop of 867.5 million metric tons and analysts survey by Bloomberg News are forecasting a price of $4.305/bushel next year. Corn is trading today at about $6.20/bushel.

Demand for meat is driving the demand for corn and wheat as feed for cattle, pigs, and chickens, with total demand for feed expected to reach 640.6 million metric tons in the crop season ending next Spring.

The US share of the booming corn crop will decrease to less than 50% for the first time in 40 years.

The 17.9 million shares are worth close to $900 million, ad that is an exponentially larger stake that what Temasek owned at the end of the September quarter.  If Temasek wants an influential stake in one of the leading phosphate and potash suppliers, what does it mean for the valuations in Potash Corp. of Saskatchewan, Inc. (NYSE: POT) and Intrepid Potash, Inc. (NYSE: IPI)?

Temasek’s stake is now larger than Wellington’s 6.4% stake, but is still well under the Cargill Trusts that has been unloading shares.  We now know who likely absorbed more of the shares sales from those trusts.

Temasek’s effort to invest in resources and energy may be growing, particularly now that some of these shares have “gone on sale.”  Mosaic shares are down almost 45% from the 52-week high.  With a fund size of somewhere close to $150 billion, Temasek can afford to do deals of this size.  Effectively, this (in theory) gives the Singapore population some protection against rising potash and fertilizer prices in the future.  With a 0.4% dividend yield, the stake will not exactly be a high dividend for the sovereign wealth fund.

There is a tug of war taking place right now over the future of potash and other fertilizer prices in 2012 and beyond.  A slowing global growth story from India and China is meeting what had been solid pricing power from producers.  This news would be better received had it not been for Tuesday’s large rally followed by a post-Oracle concern about other areas deemed a bit more protected from a pending recession.

With Mosaic shares trading under 10-times expected forward earnings, even considering the international growth market risks, is it fair to ask if Mosaic is a value stock?

JON C. OGG

The net cash income is expected to be up almost 19% at $109.8 billion, and that is up $34.2 billion above the 10-year average of $75.6 billion.  This reflects only the cash transactions made within the calendar year.

To show a summary comparison, the first figure is a measure intended to track the increase in wealth from production and the second (net cash income) is used as a measure of solvency to track farms’abilities to pay bills and to pay toward debt.

If the projection is accurate, then 2011 will end up being the first year that both the net farm income and net cash income will have been above the $100 billion mark.  The USDA did quantify this though and noted that the percentage gained by both measures actually shows slight decreases from the previous year.

All things being equal, the USDA figure show the 2011 inflation-adjusted forecasts of net value added of agriculture to the U.S. economy and net cash income are the highest values recorded since 1974.

The USDA sees a 16% rise in sales of crop and livestock by U.S. farm operations in 2011 with crop sales seen exceeding $200 billion for the first time in history for the U.S.  Livestock sales are predicted to rise almost 17%.  Production expenses rose by about 12% or about $34 billion on higher input prices to almost $320 billion in 2011.

It looks like the age of austerity and free markets might actually be showing up here.  The USDA figures that government payments showed by down some 14.4% to $10.6 billion this year.

In 2011, payments to stakeholder are expected to rise only by 4.1% to $52.9 billion even though labor expenses fell by about 1.3%.

Net rent to non-operator landlords is expected to rise 12% in 2011, about half of the gain in 2010.  Cash rent is expected to rise almost 10%, due to “the increase in the value of crop output plus landlord government payments and a 7-percent increase in real estate values.”  The USDA showed that share rent should rise by 18.5%.

Tobacco farmers and quota holders are expected to receive $665 million under the Tobacco Transition Payment Program.

Being a farmer might be hard work now, but farming pays.  The trends seen here should at least set for a decent agriculture and farm equipment market into 2012.  At least that should be the case in North America.

FARM BALANCE SHEETS RISING TOO

The farm sector balance sheet estimates for 2011 are based upon  higher cash receipts for both crops and livestock, and reflect higher production expenses and higher returns in 2011 over 2010.  Three factors driving these asset values higher with the real estate are higher expected income from production assets, as well as favorable borrowing costs, and finally higher returns on these investments.

Farm real estate and non-real estate asset values are expected to rise almost 7% to $2.34 trillion this year.  The good news for a deleveraging balance sheet review is that farm business debt is expected to drop down to $242.5 billion in 2011 versus $246.9 billion in 2010.  That is expected to show that farm equity will rise to $2.1 trillion in 2011 versus $1.94 trillion in 2010.

JON C. OGG

Mosaic has a market value of roughly $24.4 billion, so another 5% of the potential float will now not be hitting the market.  Certainly not a traditional buyback, but shares are responding positively.

The trusts were selling 18 million shares of Mosaic upon its entrance into the S&P 500 Index in September and that effectively killed the gains that would have been seen from normal index buying. It was also during a time when the market was sliding lower. The sale earlier in the year was roughly $6 billion.

On last look, Mosaic shares are up 4.5% at $57.02 in active pre-market trading and the 52-week range is $44.86 to $89.24.

JON C. OGG

Of course, the main culprit for this increase is the rising cost of the food. While a relish tray decreased in price, all the other foods examined cost more. A 16-pound turkey costs nearly $4, or 22%, more than last year.  Based on AFBF’s report, 24/7 Wall St. reviewed the 11 main ingredients of a typical Thanksgiving dinner.

The AFBF’s annual report, its 26th in a row, looks at the traditional foods consumed at an average 10-person Thanksgiving dinner. The price estimates are based on Farm Bureau volunteers from around the country who report the standard food prices without using special coupons or deals.

According to the report, the foods include a 16-pound turkey, a gallon of milk, a 30-ounce can of pumpkin pie mix, a half pint of whipped cream, 14 oz. of cubed stuffing, a pound of green beans, 12 rolls, three pounds of sweet potatoes, 12 ounces of fresh cranberries, 2 pie shells, a 1-pound relish tray (carrots and celery) and various other ingredients.

24/7 wall has examined 11 of the ingredients, looking at how much the United States produces of each of these goods, and how much the prices of the basic food commodities have changed over time.

Large farm products companies like Archer Daniels Midland Co. (NYSE: ADM) and Bunge Ltd. (NYSE: BG) have watch corn and wheat prices decline by about -20% and -29% since peaks earlier this year. Fertilizer prices have risen and so have fuel prices. All have an impact on revenues and earnings.

Processing companies like Tyson Foods Inc. (NYSE: TSN), Smithfield Foods, Inc. (NYSE: SFD), Corn Products International Inc. (NYSE: CPO), and ConAgra Foods, Inc. (NYSE: CAG) package private label foods, provide commercial food, and even offer some branded products. The diversity of their customers gives them a bit of a barrier against a collapse in one or another of their markets.

Packaged food giants like Kraft Inc. (NYSE: KFT), Sara Lee Corp. (NYSE: SLE), General Mills, Inc. (NYSE: GIS), and Kellogg Company (NYSE: K) are all household names and depend on strong brands to carry them through slow economic times.

Data from Yahoo! Finance, and current share prices gathered about noon today.

Archer Daniels Midland Co. (NYSE: ADM) has a median target price of $35.00 from 13 brokers. Shares are trading today at $28.88, for an implied gain of $6.12, or 21%. ADM’s forward P/E is 8.52 and the company pays a dividend yield of 2.3%. The stock’s 52-week trading range is $23.69-$38.02, and at today’s price that’s about 22% above its 52-week low and 24% below the 52-week high. This year’s wheat harvest looks to be on a near-record pace, and wheat prices are expected to fall to below $6/bushel by the end of the year from a current price of around $6.36.

Rising corn prices hit ADM hard in its most recent quarter, lowering profit in its biofuel (ethanol) division by -23% and in its sweetener and starches division by -81%. Corn prices are currently expected to remain about the same into next year, which won’t help ADM’s processing revenue. Fortunately for the company its trading profits will get a boost from the higher corn prices.

Bunge Ltd. (NYSE: BG) has a median target price of $74.00 from 11 brokers. Shares are trading today at $61.38, for an implied gain of $12.62, or 21%. Bunge’s forward P/E is 9.32 and the company pays a dividend yield of 1.6%. The stock’s 52-week trading range is $54.03-$76.13, and at today’s price that’s about 14% above its 52-week low and 19% below the 52-week high.

Bunge missed EPS estimates badly in its third quarter as the company ran afoul of volatility in the grain markets. The company painted a brighter picture for its fourth quarter, basing its view on the tightness of supply and the rising demand for food.

Tyson Foods Inc. (NYSE: TSN) has a median target price of $23.00 from 15 brokers. Shares are trading today at $19.27, for an implied gain of $3.73, or 19%. Tyson’s forward P/E is 9.53 and the company pays a dividend yield of 0.8%. The stock’s 52-week trading range is $14.79-$20.12, and at today’s price that’s about 30% above its 52-week low and 4% below the 52-week high.

Tyson will report earnings for its fourth fiscal quarter on November 21st. The consensus EPS estimate is $0.32, half as much as the same period a year ago. Rising feed costs have hammered revenues and earnings this year, and Tyson and other chicken producers are trying to get its customers to share commodity price risk by taking shorter term contracts tied to the cost of feed grains.