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Archer-Daniels-Midland Company Message Board

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  • Emel_ Emel_ Apr 25, 2010 11:20 PM Flag

    Target price $30

    "It's all about the DBA"

    Very few things are ever about DBA. It's just a bad investment to compare it to other ag companies.

    DBA will suffer almost every year from contango. 5-7% (Sugar bailed them out last year, but that won't happen every year.) So it'll be hard pressed to ever rise and hold gains. If it wasn't for inflation, I would say DBA would NEVER hit 30 again. As in ever.

    And unless that said inflation occurs over a very short term period of high (hyper) inflation in the ag commodities, DBA will underperform year over year.

    Avoid it just like you should avoid UNG and USO. All destined for zero one day.

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    • ok but if DBA can have a strong move these next 6 mos ADM should go, otherwise dont see much catalysts it puts out good numbers and nothing, oil pops nicely no benefit from ethanol segment... maybe if dollar plummets but again you'll see the DBA spike then as well

      • 1 Reply to ramaji2
      • No doubt the variation in commodity price has an effect on adm, but its unclear how. that is what side of a commodity trade are they on at any given time? so adm can make or lose profits on commodity pricing, but one must remember they are mostly a processor and handler and will turn profits often independant of commodity prices. Adm will be shipping around the world regardless of commodity price fluctuations. In my ming they are closer to a utility and pass along costs to the "captive market", or should is say "captive consumer", like we have a choice to eat or not today.

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