Chris Kapsch, Analyst at Topeka Capital Markets, Interviews with The Wall Street Transcript: Agricultural Chemical Stocks Positively Correlated to Corn Prices

Wall Street Transcript

67 WALL STREET, New York - July 24, 2013 - The Wall Street Transcript has just published its Agricultural & Specialty Chemicals Report offering a timely review of the sector to serious investors and industry executives. This special feature contains expert industry commentary through in-depth interviews with public company CEOs and Equity Analysts. The full issue is available by calling (212) 952-7433 or via The Wall Street Transcript Online.

Topics covered: Crop Yield Management - U.S. Corn Crop - Chemicals Companies Pricing Power - Fertilizers, Paints and Coatings, and Petrochemicals - Emerging Market Demand - Specialty Chemicals and Fertilizer Pricing Power

Companies include: Avery Dennison Corporation (AVY), Monsanto Co. (MON), W.R. Grace & Co. (GRA), Hexcel Corp. (HXL), American Vanguard Corp. (AVD), Polypore International Inc. (PPO), OM Group Inc. (OMG), Albemarle Corp. (ALB) and many more.

In the following excerpt from the Agricultural & Specialty Chemicals Report, an expert analyst discusses the outlook for the sector for investors:

TWST: What is happening with corn prices, and what is the impact on your specialty chemical companies?

Mr. Kapsch: Corn prices affect companies that have exposure to the ag industry, of course, and corn prices have come off of historic highs. This has been a function of the notion that there'll be a record or bumper crop this growing season, and demand being weaker, including corn exports being down, as well as softer demand from the protein sector.

It's really too early to tell which direction corn prices may go from here. There's one camp that believes that we'll see very strong yields, which would improve supply and be bearish, therefore, for corn prices. Proprietary contacts in the ag space indicate, conversely, there are considerations that could actually cause corn prices to re-rally.

One is that the forecast corn acreage number is probably going to have to be revised lower, a function of late plantings this year; a lot of intended corn acreage in parts of the upper Midwest and the western part of the Corn Belt simply did not get planted.

Secondly, for much of the acreage that did get planted, because the plantings were so late, growers purportedly had to switch to what's known as early corn, or varieties of corn that tend to mature earlier, and the yields from those varieties tends to be lower than the more normal or preferred varieties.

Another thing is that the very wet or muddy field conditions experienced late this spring also tend to have an adverse effect on the yield. So with acreage and yield forecasts that are likely to be revised lower, we think there's a chance corn prices could re-rally closer to harvest time, so any negative investor sentiment being created by the recent pullback in corn could actually provide an opportunity for ag-related equities that have been underperforming...

For more of this interview and many others visit the Wall Street Transcript - a unique service for investors and industry researchers - providing fresh commentary and insight through verbatim interviews with CEOs, portfolio managers and research analysts. This special issue is available by calling (212) 952-7433 or via The Wall Street Transcript Online.

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