Advertisement
U.S. markets open in 8 hours 7 minutes
  • S&P Futures

    5,208.00
    -6.75 (-0.13%)
     
  • Dow Futures

    39,209.00
    -14.00 (-0.04%)
     
  • Nasdaq Futures

    18,180.50
    -51.00 (-0.28%)
     
  • Russell 2000 Futures

    2,047.30
    -2.50 (-0.12%)
     
  • Crude Oil

    82.58
    -0.14 (-0.17%)
     
  • Gold

    2,162.40
    -1.90 (-0.09%)
     
  • Silver

    25.30
    +0.03 (+0.12%)
     
  • EUR/USD

    1.0870
    -0.0007 (-0.07%)
     
  • 10-Yr Bond

    4.3400
    0.0000 (0.00%)
     
  • Vix

    14.33
    -0.08 (-0.56%)
     
  • GBP/USD

    1.2716
    -0.0013 (-0.10%)
     
  • USD/JPY

    150.2400
    +1.1420 (+0.77%)
     
  • Bitcoin USD

    65,160.35
    -3,092.55 (-4.53%)
     
  • CMC Crypto 200

    885.54
    0.00 (0.00%)
     
  • FTSE 100

    7,722.55
    -4.87 (-0.06%)
     
  • Nikkei 225

    39,898.17
    +157.77 (+0.40%)
     

Fertilizer M&A Rumor Does Nothing for Agribusiness ETF

In another sign of investors’ lack of enthusiasm for agribusiness equities and the Market Vectors Agribusiness ETF (MOO) , that ETF is trading only modestly higher Tuesday despite rumors of a potential marriage between two of its components.

Norway’s Yara International (YARIY) and CF Industries (CF)are in talks regarding a merger that would create the world’s largest nitrogen fertilizer company, reports Kjetil Malkenes Hovland for the Wall Street Journal. The companies have even confirmed the talks, according to the Journal.

Confirmation of the potential merger is making only a negligible difference for the already downtrodden MOO. The ETF is trading just two cents higher at this writing despite CF surging 6.5%, perhaps causing some investors to speculate as to what it will take to get the lagging ETF going in the right direction.

CF and Yara combined for 5.6% of MOO’s weight at Monday’s close, according to Market Vectors data. However, if a deal is reached between the two companies, the combined market value would be $26.3 billion, just below $28.9 billion market cap on Potash Corp. of Saskatchewan (POT), according to the Journal. Potash is MOO’s fifth-largest holding at a weight of nearly 6.2%.

Since 2008, MOO has only outperformed the S&P 500 twice with the last occurrence in 2010. Some frustrated investors have been departing MOO and doing so in significant fashion. The ETF has lost $2.9 billion in assets this year, a total surpassed by only the SPDR S&P 500 ETF (SPY) and the PowerShares QQQ (QQQ) . [Investors Flee Agribusiness ETFs]

MOO has traded slightly lower this year while SPY is higher by nearly 9% and the Materials Select Sector SPDR (XLB) is up 10%.

North American-based makers of nitrogen fertilizer, several of which are found among MOO’s 56-stock roster, make for attractive acquisition targets because of proximity to natural gas, a key ingredient in the production of nitrogen-based crop nutrients.

Market Vectors Agribusiness ETF

moo
moo

ETF Trends editorial team contributed to this post. Tom Lydon’s clients own shares of QQQ and SPY.

The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.

Advertisement