Modeling Adecoagro (NYSE:AGRO) is a masochist’s dream. I mean, all you have to do is successfully model global sugar prices, regional ethanol prices, commodity crop prices, and weather in multiple areas of the world. Oh, as well as production costs, capex plans, and so on.
Super easy. Barely an inconvenience.
So far Adecoagro’s multiyear capex program, inventory management, and hedging strategies are looking smart, as the company is well-placed to leverage rising commodity prices. Why are the shares down from an early summer high close to $12? I assume it’s because of management’s acknowledgement that frosts would reduce crushing output this year. There are risks that the weather impact to Adecoagro’s output could be even worse, but I think the high prices offer at least some coverage and I think these shares remain undervalued.
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Adecoagro Benefiting From Past Investments And A Tight SEE Market
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