Day: October 21, 2024

By Julie Ingwersen and Heather Schlitz

CHICAGO (Reuters) – U.S. farmers are harvesting two of the largest corn and soybean crops in history at the fastest pace in years, straining their physical capabilities and their grain storage capacity.

The massive influx of crops is testing growers who are already grappling with grain prices near four-year lows, stiff competition for global export sales and farm incomes that are down 23% from a record high just two years ago.

Many Midwestern farmers still have grain left in storage from 2023, after they refused to sell a record corn crop due to low prices. Now, dry weather is accelerating this year’s harvests and forcing grain handlers in some areas to store corn outside, rather than in storage bins.

“It has been fast and furious,” Brent Johnson, a corn and soybean farmer in Ashland, Illinois, said of harvesting.

Weeks of warm and dry weather across the Corn Belt this autumn sped up crop maturity and enabled combines to keep rolling. As a result, farmers harvested 47% of the country’s second biggest corn crop in history by Oct. 13, topping the five-year average of 39%, according to U.S. data.

The harvest of the record-large soybean crop was 67% complete by Oct. 13, the fastest pace since 2012, when a major drought limited production.

Jeff O’Connor, who grows corn and soybeans near Kankakee, Illinois, said his employees only had a couple of half-days off to rest in the past month due to rapid harvesting.

“My people and equipment would like a break,” he said.

As soy harvesting winds down, farmers are moving on to corn, which typically yields more than three times as much grain per acre than soybeans. At some Midwest elevators, the flow of corn from the fields has been filling up storage, causing long lines of trucks waiting to dump their loads.

In Shell Rock, Iowa, ethanol producer POET is storing corn on the ground, local farmer Caleb Hamer said, adding that he dumped some of his harvest on a pile that looked like it held 1.5 million bushels.

“We are harvesting a crop too fast for our storage infrastructure. That’s the biggest thing,” said Chad Henderson, founder of Wisconsin-based Prime Agricultural Consultants.

Quick harvesting and localized storage squeezes are forcing farmers to consider selling some crops for less than it cost to produce them. Yet corn futures prices are signaling they should hold the grain for a few months, if possible.

On the Chicago Board of Trade, benchmark December corn futures were trading at a roughly 22-cent discount to the May 2025 contract. That means farmers could earn 22 cents a bushel by selling their corn for deferred delivery in May.

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Still, growers should not store their harvest without booking any sales and risk a deeper market downturn, CoBank economist Tanner Ehmke said.

Chris Gibbs, who grows corn and soybeans in Ohio, said he has not made any advance deals to sell his autumn harvests for the first time in 48 years of farming.

“My marketing plan is to keep my head down and wait for an opportunity to come along, which is a very poor plan,” Gibbs said.

(Reporting by Julie Ingwersen and Heather Schlitz in Chicago. Editing by Tom Polansek and Marguerita Choy)

By Nathan Gomes and Nora Eckert

(Reuters) – General Motors (GM) and Ford Motor (F) will likely have a tough time convincing investors when they report results that Detroit’s pricing power for gasoline cars is still strong and losses from their EV ventures are dwindling.

GM is set to release its results for the July to September period on Oct. 22, while crosstown rival Ford will report on Oct. 28.

GM CEO Mary Barra said earlier this month that profit margins had not peaked on traditional gas-powered vehicles and EV sales were ramping up.

The automaker’s shares have risen by over a third this year as GM raised its annual profit forecast twice, bolstered by strong sales of gas-powered models.

In contrast, Ford has struggled with quality woes and billion-dollar EV losses that have sent its shares down 8% this year.

Analysts from Deutsche Bank have said the automaker could fall short of expectations for the quarter, hampered in particular during the period by bloated inventories.

Wall Street has for months questioned whether consumers will pay for trucks and SUVs at historically high prices as steep interest rates and broader economic concerns loom.

Data is mixed. The average listing price for a new vehicle rose 2% month-on-month in October to $47,823, according to Cox Automotive’s latest report. That price is up only about 1% from a year ago, indicating that prices have touched a ceiling.

Automakers have had to lower prices of vehicles as cautious consumers shy away from heavier purchases – a stark contrast from the pricing power companies commanded a few years back when the production of newer models was constrained by supply chain issues.

“Concerns over peak pricing … as well as uncertainties around EV strategies and penetration, serve as mid- to longer-term overhangs,” Deutsche Bank Research said in a note.

“Moreover, we also have the November election next month that could influence EV policies one way or another.”

Both Ford and GM have focused on producing more higher margin gasoline-powered models such as Ford’s Maverick pickup and GM’s Chevrolet Trax compact SUV as EV sales growth has slowed.

Ford in August canceled its much-anticipated electric three-row SUV, saying it could not profitably launch the vehicle. GM has gone slow on its EV production goals.

The Detroit automakers have also grabbed significant market share from struggling rival Stellantis, whose sales in North America have been lagging.

Investors and analysts will also be looking for comments on how the economy is affecting consumers.

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“Even with a larger-than-expected rate cut by the Fed in September, there hasn’t been a material improvement in auto loan rates or the overall affordability of new vehicles,” said Cox Automotive Chief Economist Jonathan Smoke.

Consumers’ preferences have shifted towards economical compact crossovers over traditionally preferred larger vehicles due to their lower upkeep costs and better gas mileage, U.S. automakers’ third-quarter sales data showed.

THE NUMBERS

GM:

** Analysts estimate Q3 revenue to grow about 1% to $44.5 billion when it reports results on Oct. 22

** Earnings per share (EPS) in the quarter estimated at $2.46

FORD:

** Analysts estimate Q3 revenue to grow about 2% to $42 billion when it reports results on Oct. 28

** Earnings per share (EPS) in the quarter estimated at $0.48

(Reporting by Nathan Gomes in Bengaluru, Nora Eckert in Detroit; Editing by Saumyadeb Chakrabarty)

Philippe Laffont is a billionaire investor best known for founding the hedge fund Coatue Management. While hedge funds are widely known for their sophisticated trading prowess and secretive natures, retail investors can get a glimpse into the stocks that financial institutions are buying and selling once per quarter by looking at a form 13F.

Coatue’s latest 13F contained a number of trades across major technology stocks, particularly those looking to disrupt artificial intelligence (AI). However, the fund also made a massive purchase in a data center opportunity that has largely been flying under the radar. That’s right! There are other opportunities in data centers besides Nvidia.

Below, I’m going to analyze the data center opportunity on Coatue’s radar and assess if now is a good opportunity to buy the stock.

What data center stock did Coatue Management just buy?

According to its most recent 13F, Coatue purchased 2.9 million shares of Constellation Energy (NASDAQ: CEG) during the second quarter — increasing its position by 139%.

I don’t blame you if you’re confused as to how a power utility could be seen as a data center opportunity. Here’s the thing: Data centers consume a ton of power. With AI becoming more of a tailwind for businesses across all industry sectors, companies are going to need to invest in more energy-efficient infrastructure.

This is where Constellation Energy comes into focus. The company specializes in nuclear power, which is widely seen as a superior alternative to traditional sources of powering data centers.

Some recent big-ticket moves in nuclear power

Several names in big tech have been quietly making moves at the intersection of nuclear power and data centers this year. In March, Amazon‘s cloud unit, Amazon Web Services (AWS), acquired a nuclear-powered data center from Talen Energy. And just this week, the company signed agreements with a state utility called Energy Northwest and Dominion Energy, both of which will be helping Amazon develop and explore how small modular reactors (SMR) can facilitate its nuclear power projects.

These deals by Amazon follow a similar one by Alphabet, which will be relying on Kairos Power to develop SMRs.

While the subject matter of Amazon’s and Alphabet’s recent moves have dominated headlines lately, Constellation Energy is by no means late to the party. The company has been working closely with Microsoft for quite some time, and several weeks ago, the two industry leaders announced plans to reopen a nuclear power facility on Three Mile Island in Pennsylvania.

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Is Constellation Energy stock a buy right now?

The obvious takeaway here is that Constellation has experienced outsized valuation expansion recently. Following the announcement of the Three Mile Island deal on Sept. 20, shares of Constellation have risen as much as 12% — a pretty sharp move based on one press release.

While I don’t encourage trying to time your buying activity, I think investors need to approach Constellation with some caution right now. It’s no coincidence that Amazon and Alphabet have made some moves with nuclear power companies on the heels of Microsoft’s deal with Constellation.

I suspect more companies will be exploring nuclear power solutions for their data center needs. As such, shares of Constellation could experience some momentum based on any future news — whether the company is directly involved or not.

The positive thing here is that the AI story is in its early chapters. For this reason, demand for data center services and adjacent opportunities, such as nuclear power, should continue to materialize in the long run.

While Constellation Energy stock may appear a little pricey right now, Coatue’s investment is a savvy move. Investors with long-term horizons may want to keep this name on their radars.

Don’t miss this second chance at a potentially lucrative opportunity

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Right now, we’re issuing “Double Down” alerts for three incredible companies, and there may not be another chance like this anytime soon.

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John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. Adam Spatacco has positions in Alphabet, Amazon, Microsoft, and Nvidia. The Motley Fool has positions in and recommends Alphabet, Amazon, Constellation Energy, Microsoft, and Nvidia. The Motley Fool recommends Dominion Energy and recommends the following options: long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft. The Motley Fool has a disclosure policy.

Billionaire Philippe Laffont Just Increased His Position by 139% in This Data Center Opportunity (Hint: It’s Not Nvidia) was originally published by The Motley Fool

By Abhijith Ganapavaram and Allison Lampert

(Reuters) -Boeing’s shares rose 4% on Monday on hopes of an end to a crippling strike, although analysts expressed doubts that the proposed labor contract unveiled over the weekend would muster enough support from workers.

About 33,000 workers will vote on the contract proposal on Wednesday after a more than month-long work stoppage, which has halted production of models including its best-selling 737 MAX narrowbody jets.

The vote also coincides with Boeing’s third-quarter results, in which it is expected to report a hefty loss.

“We view the proposal as a positive step,” Ben Tsocanos, aerospace director at ratings agency S&P Global, told Reuters. “Resolving the strike quickly is key to improving the company’s financial position and supporting the rating.”

Moody’s declined to comment on the new proposal. Ratings agencies have warned of a downgrade if the strike drags on.

The new contract proposal announced on Saturday includes a 35% pay hike over four years, a $7,000 ratification bonus, a reinstated incentive plan and enhanced contributions to workers’ 401(k) retirement plans, including a one-time $5,000 contribution plus up to 12% in employer contributions.

The new wage increase and the ratification bonus are an improvement over the previous offer, which was rebuffed by the striking workers, but the salary hikes still fall short of a 40% pay rise over four years demanded by the Machinists’ union.

Wells Fargo’s Matthew Akers, who has a bearish view on Boeing stock, said the offer may not be ratified.

“Our analysis of over 1,000 online comments implies a more constructive view but still not enough to pass,” Akers said in a note.

He estimated 20% were constructive on the latest offer vs 3% on the prior offer after reviewing comments on IAM 751 Reddit forum, though he cautioned the forum maybe negatively biased.

J.P.Morgan’s Seth Seifman estimated the wage hikes might increase Boeing’s costs by more than $1 billion, while Jefferies analyst Sheila Kahyaoglu expects wage-related expenses at about $1.3 billion.

The latest proposal follows weeks of sometimes acrimonious discussions between Boeing and the International Association of Machinists and Aerospace Workers (IAM) union, whose leadership faced fury from some members after endorsing the first offer from Boeing that most workers opposed.

The IAM did not explicitly endorse the latest offer but told workers on Saturday “it is worthy of your consideration”.

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However, even if the new contract is accepted by members, the planemaker still faces the challenge of quickly restoring production to pre-strike levels once workers return.

“Based on our analysis of prior Boeing strikes, it has taken an average of 6-12 months after the conclusion of the strike for production rates to return to pre-strike levels. Moreover, the impact the strike has had on the already fragile supply chain is uncertain,” RBC Capital Markets analysts said.

The work stoppage has halted production of Boeing’s cash-cow 737 MAX, and 767 and 777 widebodies.

Boeing shares were trading at $161.

In a separate labor action, about 5,000 workers were set to return to work at business jet maker Textron’s facilities in Wichita, Kansas, after voting to accept a five-year contract providing wage increases of 31%.

“Boeing’s latest offer more likely to win approval, particularly following Textron’s IAM contract approval; but negative Reddit posts suggest it may not be a shoo-in,” TD Cowen analyst Cai von Rumohr said.

In a boost to Boeing, Dubai’s Emirates Airlines ordered five Boeing 777F freighters on Monday and will make a decision this year on a purchase of further Boeing or Airbus models.

(Reporting By Allison Lampert in Montreal and Abhijith Ganapavaram in Bengaluru; Editing by Anil D’Silva and Shounak Dasgupta)