Knobias Clip Report (06-11-2008)
Submitted By Knobias ClipReport
GRO: Shares Gain 5.5% on Seed Rights Acquisition
Wednesday’s session saw oil prices rise again on lower than expected energy inventory numbers. The Department of Energy reported a 4.56 million barrel draw on oil while gasoline saw a surplus of 998 thousand. Expectations were for a draw of 1.5 million barrels and a surplus in gasoline of 1.45 million. Both numbers were worse than expected for consumers and oil bears which led the major indices down again while solar names gained.
Financials ushered the markets down with Merrill down almost $2, Citigroup off over $1 which was under the $20 threshold and the lowest level it’s seen in almost a decade, while Lehman was off by more than $2.40 at $25 which was the lowest it’s seen in five years.
With oil and gas up running, another commodity has also seen a large increase in prices. Corn has been on the run with the amount of rain seen in the Midwest. The area which is responsible for the majority of the corn crop has seen a huge amount of rain which has stalled planting and caused losses in many fields that have already been planted. Corn needs heat and sun in ample amounts to yield large amounts. The rain has delayed many fields from being planted which cuts the amount of heat and sun the latter planted corn will receive. The later its planted, the lower it will yield.
One name in the industry had some fairly positive news on Wednesday. Agria Corp (GRO) is an innovative China-based agri-solutions provider focusing on research and development, production and distribution of three different types of upstream agricultural products. Its diversified portfolio of products comprises corn seeds, sheep breeding and seedlings, including proprietary products developed through its own research and development capability. The company has access to approximately 27,000 acres of farmland in seven provinces and its extensive distribution network provides direct or third party distribution in 14 provinces.
Before bell on Wednesday, the Company announced that it had acquired the production and sales rights to two proprietary corn seeds from NKY Company (”NKY”), a Beijing-based, privately held company. The financial terms of the acquisition were not disclosed.
The proprietary seeds, JKN2000 and JKN120, were originally developed by the Beijing Academy of Agricultural Services (”BAAS”), which sold the rights to NKY in September 2007. The seeds, categorized as a type of fresh sticky corn seed, were developed for human rather than animal consumption. Following the news, shares gained over 5.5% on almost a million shares traded.
With corn being the latest buzz word besides oil, solar, or alternative energy, the name could be one to watch over the coming months. Investors would be wise to watch.
Visit 1800blogger to see all of our industry leading blogs.
