Less Constructive on Agriculture Sector Equities Than Global Crop Markets After A Weak 2024 – Corn Looks Interesting!

Companies Mentioned: CF Industries, Nutrien, LSB Industries, Yara, FMC, Eastman, Air Products, Borouge, ADNOC, Borealis, Wanhua, Ero Copper, Vale, Freeport McMoRan, Glenfarne Group, Woodside, McDermott, Zachry Industrial, Golden Pass LNG, New Fortress Energy, Shell, Fulcrum BioEnergy, Lufthansa, Airbus, Clear Sky, LanzaJet, Gevo, HIF Global, Boeing
Commodities Mentioned: Ammonia, Fertilizer, Corn, Hydrogen, Biofuels, Steel, Copper, LNG, Natural Gas, Crude Oil, Carbon Credits, CO2, SAF, EVs, Batteries, Lithium, Corn, Ethanol, Jet Fuel, Waste, Biomass, Corn, Soybean, Canola, Ethanol, Fuels

Key Findings

General Thoughts: We discuss the US agriculture sector ahead of 2Q24 business updates, considering US corn prices is near a YTD low – we are more constructive on crop price support than agriculture sector equities overall.
Supply Chain/Commodities: We comment on apparent distortions being seen in agriculture and chemical sector equities relative to their historic relationships, and generally comment on an uptick in copper growth investments.
Energy/Upstream: We highlight the build-out of US LNG capacity, the still widespread between Ex-US natural gas and US natural gas relative to pre-COVID levels, which is benefiting US chemical producers, including ammonia.
Sustainability/Energy Transition: We continue our focus on carbon credits, noting that many industries will struggle to meet low carbon goals without a robust credit market. We note a turn in SAF activity – bullish for corn.
Downstream/Other Chemicals: We highlight US crop prices, showing the underperformance in corn relative to soybeans, as compared to 2019 levels, and comment on chemical end market trends worth notice this week.