C.M.O. 12.02.2009
Credit Market Overview
December 2, 2009
Among the many sins Uncle Sam is despised for around the world one we hear so little of these days is “genetic modification”. I’m not talking about the Hulk here but more what the U.S. agriculture industry has done with those little things we put in the ground hoping that big things come out of the ground.
In a sign that America and China might actually share the same thinking on a topic or two the Middle Kingdom has given its approval to produce and consume two strains of genetically modified rice. More formally stated in a written response to questions posed by the WSJ, “China’s Ministry of Agriculture said Monday that it had issued safety certificates to domestically developed strains of genetically modified rice and corn”. The Ministry went on to say, “This is an important achievement in independent intellectual property from our country’s research into genetic modification technology, and creates a good basis for commercial production”.
Andrew McConville, head of Corporate Affairs for Syngenta AG, the Swiss based agribusiness firm wasted little time in praising the development saying; “It’s good news in the context of commercial introduction of biotechnology in crops in China”.
The king of genetic modification here in the U.S. is Monsanto (MON) and the CEO, Hugh Grant said recently that “the roll-out of high-tech corn and soybean seeds and international expansion will provide the ‘sling-shot’ for Monsanto to reach medium-term growth targets”. The products HG was referring to were SmartStax corn seeds and Roundup Ready 2Yield soybeans.
For the uninitiated, Roundup is an herbicide or what we here in the states call a “weed-killer”. It is featured on T.V. commercials throughout the spring and summer and comes in a spray bottle for use by all those folks that can still afford to maintain the property around the home they’re about to foreclose on. That it is bred genetically into the seed that grows into the plant that becomes part of what we eat is more than a little unsettling but this is America and more is always better here so if having your tofu with a side of something that kills green leafy plants is the result of the farmer’s making more money, well, the farm-lobbyists in D.C. can take care of that during the same meeting they’re trying to convince legislators to increase the allowable percentage of ethanol in gas to be increased to 15% when the cars made by Government Motors can’t run on anything more than 10%.
Hugh Grant’s seed “sling-shot” has launched MON from a close of $69.85 on 10/29 to its closing price of $80.87 last night. The CDS bottomed at 39bps on 8/3 and bounced off the 40bp level again on 9/22 and 9/29. Since then it has risen as high as 50bps on 11/30 and closed yesterday at 49bps.
For anyone worried about having a side of Roundup included in their edamame you will be happy to know that in 2008 the USDA went one step farther and approved the sale of food from clones and their offspring. Barry Pollard, a neurosurgeon, owns Pollard Farms and the 400 head of Black Angus cattle that roam it, 22 of which are clones.
“We’re trying to stay on the very top of the heap of quality, genetically, with animals that will gain well and fatten well, produce well and reproduce well”. Pollard said.
Heck, if we could just move that technology to people we might be able to find buyers for all the foreclosed homes.
Enjoy the week.
Jim Delaney
