How Did Agricultural Companies Perform on June 27, Post-Brexit?



Agricultural companies

Most agricultural companies were trading deeply in negative territory at the end of the day on Monday, June 27, 2016. Brexit woes were continuing to cast a dark shadow on global markets.

Fertilizer companies that have the greatest exposure to European markets will see the impact in the coming years. Let’s see how major fertilizer producers performed on Monday.

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Intraday performance

Most agricultural stocks saw a significant decline on Monday. Intrepid Potash (IPI) fell as much as ~14%, followed by K+S, which fell ~11% during the intraday session. Mosaic (MOS) fell 8.2%, while Israel Chemicals (ICL) and CF Industries (CF) fell 7.8% and 7.7%, respectively.

It’s worth noting that Israel Chemicals, which has a large exposure to Europe and Asia, will be impacted by fluctuations in the currencies of countries in these continents. CF Industries also has a high exposure to European currencies, which we’ll look at later in the series. But first, let’s see how other stocks performed.

PotashCorp (POT) fell 6.3%, and CVR Partners (UAN) fell ~5% during the day. Agrium (AGU) and Terra Nitrogen (TNH) fell 3.6% and 1.9%, respectively.

Seeds and chemical companies

Seed and agricultural chemicals companies such as Monsanto (MON) and Syngenta (SYT) fell 3.9% and 1%, respectively. Dow Chemicals (DOW) and DuPont (DD), which recently announced a merger, fell about 3% each.

Against the benchmark

Overall, agricultural companies have fallen harder, by an average of 6%, than benchmarks such as the VanEck Vectors Agribusiness (MOO), the S&P 500, and the Materials Select Sector SPDR ETF (XLB), which together fell an average of 2.6% on Monday June 27.

The Brexit spelled turmoil in the currencies market. Because most of the above companies have their operations in multiple European countries, what happens to European currencies plays a big role in their earnings. Let’s look at that next.


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