I originally posted this February, 2009, and have copy/pasted the contents of the original post below. If so compelled, you can certainly click here to see that the original post was indeed in February>
http://messages.finance.yahoo.com/Stocks...


Before reading what I wrote, I would ask that you first click on this link (below) so you can better contextually understand the early content of the post(this link was also contained in the original post, at bottom)>>
http://img.jcichina.com/img_jgzs/jgrb_co...

Here is what I wrote. Enjoy! >>>

I am posting this admittedly incomplete and imperfect rudimentary analysis for board members to review, and in hopes that it will serve as a catalyst for further intelligent discussion. As is the case with all incomplete analysis, there is bias. That said, let me begin...

Agfeed's largest input costs are corn & soy.

It is customary for feed companies, including Agfeed (see SEC filings and PR), to increase their stocks and lock in prices with suppliers before the New Year Festival break. It was in part because of Agfeed locking in prices when they did last year that Agfeed's input costs remained relatively low in 2008, even as corn and soy prices skyrocketed.

With Agfeed locking in prices with their suppliers this year at the same time they locked in last year, Agfeed will actually be paying a MINIMUM of 10% LESS for corn and soy in 2009, as compared to 2008.

Ultimately, margins are the critical issue. It goes without saying that government policies will continue to play a role in influencing Agfeed's margins. That being said, it is fundamental to anyone's due diligence of Agfeed's business model to gain at least a rudimentary understanding of the relationship between spot market commodities prices, Agfeed mangement's practice of locking in prices with suppliers, and the interdependent influence of these variables have on Agfeed's bottom line.

As spot market commodities prices rise, so does the end price that Agfeed charges for its feed, resulting in higher profit margins in the feed division. Synchronistically, Agfeed hog farms division benefits in that as spot mark commodities prices (and consequently feed prices) rise, so too does the spot market price for live hogs.

Obviously, the opposite is true - that as spot market commodities prices fall, so too does the spot market price for live hogs. A comparison of corn & soy price trends from July '08 to early Oct.'08, and the trend in live hog prices during the same period illuminates this point.

[section omitted due to yahoo's 4000 character limit]

For compartive purposes, you may find it useful to open these two links in seperate windows before opening the other links.

LIVE HOGS (weekly)
http://img.jcichina.com/img_jgzs/jgrb_ho...

LIVE HOGS (monthly)
http://img.jcichina.com/img_jgzs/yp_hog....

CORN
Weekly Corn Prices Dec.'07-Jan.'09
http://img.jcichina.com/img_jgzs/jgrb_co...

Monthly Corn Prices Jan.'99-Jan.'09
http://img.jcichina.com/img_jgzs/zp_corn...

SOY
Weekly Soy Prices Jan.'08-Jan.'09
http://img.jcichina.com/img_jgzs/jgrb_so...

Monthly Soymeal Prices Jan.'99-Dec.'08
http://img.jcichina.com/img_jgzs/zp_soym...

Dec.'08 Soybean Import stocks
3,221,660 metric tons

Jan.'09 Soybean Import stocks
4,147,920 metric tons

Updated Soybean Import stocks (by port)
http://www.jcichina.com/jgrb/stock_view....

I hope you have found this useful. Comments and further contributions welcome.

editorial 11/06/09 - If you want to educate yourself, there is documented, publically available, verifiable, factual information. No amount of rhetoric or falacy can alter what is reality.

Take care.