Yonder 40 Sept 28 2007

Twenty-seven of the 40 stocks in the Yonder 40 stock index dropped in the last week, even as the major indexes increased. The Yonder 40, forty publicly-traded companies that reflect the rural economy, was down a percent last week while the other major indexes rose slightly or were even.

The DY 40 was down 1.2 percent in the last week of September. The Dow rose half a percent. The NASDAQ index was up a 1.1 percent. And the Standard & Poor’s 500 was even.

The news of the week was dominated by reports of higher worldwide demands for farm products — and, as a result, much higher prices. The Wall Street Journal reported that “prices of Illinois corn and soybeans are up 40% and 75%, respectively, from a year ago. Kansas wheat is up 70% or more. And a growing number of economists and agribusiness executives think the run-ups could last as long as a decade, raising the cost of all kinds of food.”

Prices aren’t just up for grains. Eggs are higher, as are most commodities: sorghum, lentils, sunflower seeds, rice and peas. Slaughterhouse prices for chickens in Georgia are up 15 percent from last year.

The demand for grains has been increased by incentives offered for ethanol. But the Journal reports that the demands for foodstuffs is being driven also by growing economies in Latin America and Asia, where rising incomes is allowing more people to buy milk and meat. (Americans now spend just about ten percent of their disposable income on food.)

Rising food prices are causing disruptions around the world. Italian shoppers are protesting higher pasta prices. Pakistan is curbing wheat exports. The Mexican government has put a cap on the price of corn tortillas. Aid dollars are buying less food for the world’s hungry.

Rising prices are good for farmers and good for some companies in the Yonder 40. Shares of Deere, the farm equipment maker, are up 76% over a year before. Monsanto, which produces seed and herbicides, is up 79% in the last year — and nearly nine percent in the last week.

Monsanto stock reached an all time high last week. And new ratings for both Monsanto and Deere rated the Yonder stocks as buys.

There was other news among the Yonder 40 firms:

“¢ Peabody Coal — in fact, all mining firms — are fighting higher fuel prices. Mining firms consume huge amounts of diesel.

“¢ A Smithfield Foods board member has increased his stake in the company. The Wall Street Journal reported, “Paul J. Fribourg, whose ContiGroup Cos. acquired a 6.3% stake in the pork-and-beef company through the sale of Premium Standard Farms Inc. to Smithfield in May, reported Monday the purchase of about $9.43 million in Smithfield stock, giving ContiGroup a 6.5% stake in Smithfield.”

“¢ Wal-Mart stock continued to drop. The company this week announced that it would sell only concentrated laundry detergent in an effort to save water.

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