RT Felix Prehn 🐶 (@felixprehn)It is now illegal for most American farmers to do what farmers have done for 10,000 years. Save seeds from their harvest to plant next season.Four corporations control over 60% of global seed sales. Bayer-Monsanto. Corteva. Syngenta-ChemChina. BASF.Over 80% of all corn and more than 90% of all soybeans planted in the United States use patented biotech seeds. Farmers sign licensing agreements that prohibit saving, replanting, or sharing seeds. Every season requires a new purchas ...

Industry Overview - The Zacks Agriculture – Operations industry is facing structural challenges such as volatile commodity prices, high input and labor costs, trade uncertainties, and rising operating expenses, which are squeezing margins and testing long-term sustainability [1][5][6] - The industry includes companies involved in the production, transportation, storage, processing, and distribution of agricultural commodities, as well as those engaged in dairy operations and the development of food ingredients using gene-editing technology [4] Long-term Outlook - Despite current headwinds, the long-term outlook for the industry remains favorable due to ongoing innovations in seeds, crop inputs, food processing, and supply chains, which are unlocking growth opportunities [2] - Rising consumer preference for healthier, sustainably produced food is reshaping demand, with significant growth expected in alternative proteins and robust demand from emerging markets [2][8] Key Players - Industry leaders such as Corteva Inc. (CTVA), Archer Daniels Midland Company (ADM), The Scotts Miracle-Gro Company (SMG), Adecoagro S.A. (AGRO), and Mission Produce Inc. (AVO) are well-positioned to navigate volatility and capitalize on evolving trends in global food and agriculture [3] Financial Performance - The Zacks Agriculture – Operations industry has outperformed the Zacks Consumer Staples sector with a collective stock rally of 21.7% over the past year, compared to a 0.4% return for the sector [12] - The industry is currently trading at a forward 12-month price-to-earnings (P/E) ratio of 15.99X, lower than the S&P 500's 21.63X and the sector's 17.03X [15] Agricultural Export Projections - The U.S. Department of Agriculture projects agricultural exports of $174 billion for fiscal 2026, an increase of $1 billion from previous forecasts, driven by stronger export volumes for corn and livestock, poultry, and dairy [7] Company Highlights - **Adecoagro (AGRO)**: Focuses on agricultural and agro-industrial activities in South America, with a Zacks Rank 1 and a stock rally of 25.8% in the past year [19][20] - **Corteva (CTVA)**: Positioned for above-market growth with a strong product pipeline and a Zacks Rank 3, the stock has increased by 28.3% in the past year [22][23] - **Archer Daniels Midland (ADM)**: Benefits from strong performance in its Nutrition segment, with a Zacks Rank 3 and a stock increase of 52.3% in the past year [25][26] - **Scotts Miracle-Gro (SMG)**: Emerging from a multi-year reset with a focus on core brands, the stock has risen by 8.7% in the past year, holding a Zacks Rank 3 [29][30] - **Mission Produce (AVO)**: Engaged in sourcing and distributing avocados and other fruits, the stock has rallied 24.2% in the past year, with a Zacks Rank 3 [33][34]

Group 1 - Laird Superfoods is acquiring Navitas for $38.5 million, nearly double Laird's market capitalization, to strengthen its position in the superfoods and wellness market [3][7] - The acquisition is expected to enhance supply chain synergies and expand Laird's reach in e-commerce and retail, aligning with its mission of providing functional wellness products [4][5] - Laird's recent quarter saw a 10% increase in net sales year-over-year, despite a loss of $1 million in sales during the same period [5] Group 2 - The deal will close in the first quarter of 2026 and will expand Laird's product portfolio to include Navitas' organic offerings such as acai powder and hemp bites [7] - Funding for the acquisition will come from the sale of $50 million in Series A convertible preferred stock to Nexus Capital Management [7]

Core Insights - Conagra Brands, Inc. (CAG) reported a decline in both earnings and sales for the second quarter of fiscal 2026, reflecting a challenging consumer environment and lower volumes, partially offset by productivity gains and strong performance in certain growth categories [1] Financial Performance - Adjusted earnings per share (EPS) for the quarter were 45 cents, exceeding the Zacks Consensus Estimate of 44 cents, but down 35.7% year over year due to lower adjusted operating profit [2] - Net sales decreased by 6.8% year over year to $2,979.1 million, missing the Zacks Consensus Estimate of $2,990 million, with a 3.9% headwind from M&A and a 3% decline in organic net sales [3][11] - Organic net sales fell 3% due to a 3% decline in volume, while price/mix remained flat, with management noting a 100-basis-point headwind from retailer purchasing patterns [4][11] - Adjusted gross profit declined 17.1% to $698 million, with adjusted gross margin contracting 292 basis points to 23.4% [5] Segment Performance - Grocery & Snacks segment net sales fell 8.5% year over year to $1,209 million, impacted by a 7.0% adverse M&A effect and a 1.5% decline in organic net sales [6] - Refrigerated & Frozen segment net sales decreased by 6.5% to $1,251 million, with a 5.1% drop in organic net sales [7] - International segment sales declined 5.4% to $230 million, reflecting a 4.1% M&A impact and a 2.9% fall in organic net sales [8] - Foodservice sales decreased 1.3% to $288 million, with organic performance reflecting a 4.2% benefit from price/mix, offset by a 4.0% volume decline [9] Financial Health - In the first half of fiscal 2026, Conagra generated net cash from operating activities of $331 million, with capital expenditures totaling $219 million, resulting in free cash flow of $113 million [12] - The company ended the second quarter with net debt of $7.6 billion and paid a dividend of 35 cents per share [12] Future Outlook - Conagra reiterated its fiscal 2026 outlook, projecting organic net sales to range from a decline of 1% to growth of 1% compared to fiscal 2025, with adjusted EPS anticipated between $1.70 and $1.85 [13] - The outlook factors in continued elevated inflation in the cost of goods sold, with core inflation expected to be slightly above 4% [14] - Total cost of goods sold inflation is projected at approximately 7%, with measures expected to raise costs by roughly 3% annually before mitigation efforts [15]

Core Viewpoint - Corteva, Inc. is a global agricultural company specializing in seeds and crop protection products, with the stock previously rated as a Hold due to fair pricing [1] Company Overview - Corteva, Inc. operates in the farming sector, focusing on the production of seeds and crop protection solutions [1] Investment Focus - The analysis primarily targets small- to mid-cap companies, which are often overlooked by investors, while also occasionally reviewing large-cap companies for a broader market perspective [1]

Industry Overview - The Zacks Agriculture – Operations industry is experiencing persistent challenges such as volatile commodity prices, rising input costs, trade uncertainties, and increasing operational expenses, which are squeezing margins and disrupting productivity [1][6][10] - The industry includes companies involved in the production, transportation, storage, processing, and distribution of agricultural commodities, as well as those engaged in dairy operations and food ingredient development [3] Future Growth Factors - The U.S. Department of Agriculture projects agricultural exports to reach $173 billion for fiscal 2025, driven by stronger grain and feed exports, particularly corn, which is expected to increase by $1.2 billion [4] - The industry is benefiting from rising consumer demand for healthier food options, leading to a shift towards organic farming practices and innovations in food processing and grain-handling techniques [5] Cost Pressures - Agricultural companies are facing elevated costs due to fluctuating commodity prices and inflation-driven input increases, which are narrowing profit margins [6][7] - Companies are managing higher selling, general, and administrative (SG&A) expenses, which may continue to impact profitability [7] Industry Performance - The Zacks Agriculture – Operations industry ranks 158, placing it in the bottom 36% of over 250 Zacks industries, indicating dull near-term prospects [8][9] - Over the past year, the industry has underperformed compared to the Zacks Consumer Staples sector and the S&P 500, with a collective decline of 8% [11] Valuation Metrics - The industry is currently trading at a forward 12-month price-to-earnings (P/E) ratio of 13.21X, significantly lower than the S&P 500's 23.36X and the sector's 16.51X [14] Notable Companies - **Corteva Inc. (CTVA)**: Positioned for above-market growth with a strong product pipeline and innovation focus, expected to see 2025 earnings growth of 23.7% [17][18] - **Mission Produce Inc. (AVO)**: Engaged in sourcing and distributing avocados and other fruits, with a projected earnings growth of 12.1% for fiscal 2025 [20][22] - **Archer Daniels Midland Company (ADM)**: Focused on nutrition and sustainable materials, with a stable performance in its Nutrition segment, but facing declines in overall earnings [25][26] - **Dole plc (DOLE)**: A leader in fresh produce, benefiting from improved logistical efficiencies, though projected earnings for 2025 suggest a decline of 18.9% [29][30]

Group 1 - Corteva is considering a breakup to separate its seed and pesticide businesses into two distinct companies [1] - The decision is influenced by ongoing discussions and insights from individuals familiar with the matter [1] - This potential restructuring reflects a broader trend in the agriculture industry towards specialization [1]

Core Viewpoint - Lavoro Limited's subsidiary, Lavoro Brazil, has reached an out-of-court restructuring agreement with key suppliers to extend payment terms and secure multi-year product supply, aiming to mitigate supply chain disruptions and enhance operational efficiency [1][2][3]. Group 1: Restructuring Agreement - The agreement with suppliers includes BASF, FMC Agrícola, UPL Brasil, EuroChem, and Ourofino, and aims to support Lavoro Brazil's reorganization plan [3]. - The restructuring plan, known as the EJ Plan, will be binding upon court approval and is designed to ensure broad-based effectiveness across all eligible suppliers [2][4]. - The EJ Plan restructures approximately R$2.5 billion in trade payables owed to suppliers, categorizing them into different creditor classes with tailored repayment obligations [10][11]. Group 2: Financial Impact - Preliminary unaudited consolidated revenue for 2Q25 was R$2.25 billion, a decrease of 27% year-over-year, primarily due to inventory shortages [7][22]. - Preliminary unaudited gross profit for 2Q25 decreased by 28% to R$366.9 million, with gross margins contracting to 16.3% [22]. - The Brazil Ag Retail segment saw a 30% decline in revenue to R$1.84 billion in 2Q25, attributed to product availability constraints [22]. Group 3: Market Context - The 2023/24 crop year in Brazil faced challenges such as falling commodity prices, declining farmer profitability, and severe droughts, impacting Lavoro Brazil's operations [6]. - Despite these challenges, Lavoro Brazil gained market share and is positioned to benefit from signs of market stabilization entering FY25 [6]. Group 4: Future Outlook - The EJ Plan aims to standardize inventory supply and financing terms, ensuring reliable product availability and mitigating risks from future credit condition changes [5][9]. - Management has withdrawn its fiscal 2025 guidance due to the complexities associated with the EJ Plan [14].