annublog.com

Big Canada Wheat Crop Vies With U.s. For Export Sales

That makes the stock look extremely undervalued at less thanfive times its 2014 earnings. Another index inclusion The big news out of the U.S. airline industry last week was the inclusion of Delta Air Lines in the S&P 500, where it joined Southwest Airlines and became the only legacy carrier in the index. This helped Delta shares move higher in the days following, as the positive news was eaten up by investors who now view Delta as a safer investment. Its shares likely came under buying pressure from S&P 500-related funds as well. Air Canada was also invited to the S&P/TSX Composite, however,which is much like a Canadian version of the S&P 500. Although there are not nearly as many S&P/TSX Composite funds as there are S&P 500 funds, Air Canada’s presence in the index may increase some funds’ willingness to add shares of the airline. Additionally, investors will now see Air Canada shares in the same index as WestJet shares, decreasing the perception of WestJet as the financially healthy Canadian airline, and Air Canada as the financially unhealthy one. Turnaround at Air Canada Although Air Canada is not the strongest player in the industry, its compelling valuation makes it my top pick in the airline industry. Through a combination of growing earnings, positive industry trends, and shifting investor sentiment, Air Canada shares have more than tripled off oftheir lows last summer. Despite this impressive rally, I view these factors as continuing drivers for shares going forward. Possible risks to this rally include an economic slowdown, more aggressive capacity additions, or a spike in jet fuel prices.

“These kind of prices and protein profile will give us the tools to put it into a lot of places,” he said. “If the price is right, that’s the key, and our farmers are sellers.” Canada is the world’s second-biggest producer of spring wheat, which is used to make breads, crackers and noodles, as well as the No. 2 producer of durum wheat, a main ingredient of pasta. The biggest Canadian grain handlers are Richardson International, Viterra and Cargill Ltd. Canada Western Red Spring wheat with 12 percent protein was available this week at British Columbia ports for $283 per tonne, some 10 percent or $30 per tonne cheaper than U.S. hard red winter wheat with the same protein at the Gulf of Mexico, Doyle said. “The Canadian prices will push Canadian wheat into a lot of hard red winter markets, even where you have a substantial freight disadvantage (from Canada),” Doyle said. Wheat with mid-scale protein levels from Canada and the United States will vie for sales, particularly in Latin America and Africa, he said. This year, Canada looks to have smaller-than-usual supplies of high protein wheat (above 13 percent) that usually moves into western Europe and Asia, but there should be enough 13.0 percent protein wheat for Japan to make breads and noodles, Doyle said. Canadian wheat was competing in traditional U.S. territory last year too, such as in the Philippines, said Todd Ross, director of trading for Lansing Olam Canada. That’s likely a reflection of the move to an open Western Canadian grain market in 2012, similar to what happened in Australia after 2008, he said. “When it was an open market, everybody went to find a place that was different and a margin could be gained,” Ross said. “We’re going to do the same thing here.” Wheat importers like Iraq, Iran and Saudi Arabia may also buy Canadian spring wheat to blend with lower-quality supplies from Europe or the Black Sea region, said a Canadian grain exporter who asked not to be named because he was not authorized by his company to speak publicly.