Agri | Weather | Energy Transition, Mint Finance

Srinidhi Raghavendra

Agri | Weather | Energy Transition

Deep Fundamental Analysis

Mint Finance

Mint Finance's investment research blends deep fundamental analysis with technical & quant insights. Investment strategies straddle across multiple asset classes with risk management embedded into every trade to deliver an outsized reward-to-risk ratio.

Mint Finance's research is centered around three key themes. First, energy transition and climate change. Second, artificial intelligence. Third, shifting world order with its impact across politics and monetary economics.

Cross Asset Strategy

<ul>
<li>SMRs enable decarbonization of electricity through low carbon heat and hydrogen production. Small Modular Reactors (SMRs) are advanced nuclear reactors.</li>
<li>SMRs are not new. They have been in design phase for long and not deployed at scale with cost being the primary hurdle.</li>
<li>By 2026 data centres are expected to hog &gt;1,000 TWh of electricity which is equivalent to the electricity consumption of Japan.</li>
</ul>


SMRs enable decarbonization of electricity through low carbon heat and hydrogen production. Small Modular Reactors (SMRs) are advanced nuclear reactors.
SMRs are not new. They have been in design phase for long and not deployed at scale with cost being the primary hurdle.
By 2026 data centres are expected to hog &gt;1,000 TWh of electricity which is equivalent to the electricity consumption of Japan.


Energy Transition Requires Betting Big on Nuclear Starting Small with SMRs

Macroeconomics

<ul>
<li>Despite strong jobs data, the yield curve has inverted once again. This inversion is driven by delay in rate cut expectations.</li>
<li>Encouraging PCE data which showed inflation easing to 2.2% (lowest since 2021 &amp; close to Fed's target), the likelihood of a cumulative 50 bps cut has steadily risen.</li>
<li>Soft landing reduces urgency for aggressive rate cuts, giving the Fed more flexibility to monitor the effects of previous rate hikes and to lower rates more gradually.</li>
</ul>


Despite strong jobs data, the yield curve has inverted once again. This inversion is driven by delay in rate cut expectations.
Encouraging PCE data which showed inflation easing to 2.2% (lowest since 2021 &amp; close to Fed's target), the likelihood of a cumulative 50 bps cut has steadily risen.
Soft landing reduces urgency for aggressive rate cuts, giving the Fed more flexibility to monitor the effects of previous rate hikes and to lower rates more gradually.


Yield Curve Reinverts On Rising Soft Landing Expectations

Equity Bottom-Up

Carrier Global Corporation manufactures HVAC equipment. The Company offers heating, air-conditioning, and refrigeration solutions. Carrier Global serves customers worldwide.

<ul>
<li>July 2024 ranked as the warmest July in NOAA’s 175-year global record. Land &amp; sea surface temperatures were above average across the planet barring few exceptions.</li>
<li>July had the 2nd smallest sea ice coverage in 46-years at 8.49 million square miles. There is a 77% chance that 2024 will rank as the warmest year on record.</li>
<li>Heating, Ventilation, and Air Conditioning (“HVAC”) stocks continue to rise on strong demand as temperatures peak across the planet.</li>
</ul>


July 2024 ranked as the warmest July in NOAA’s 175-year global record. Land &amp; sea surface temperatures were above average across the planet barring few exceptions.
July had the 2nd smallest sea ice coverage in 46-years at 8.49 million square miles. There is a 77% chance that 2024 will rank as the warmest year on record.
Heating, Ventilation, and Air Conditioning (“HVAC”) stocks continue to rise on strong demand as temperatures peak across the planet.


Shares of Cooling Firms Have Turned Red Hot on Record Setting Scorching Heat

Commodities

Corn No. 2 Yellow at par and substitutions at differentials established by the exchange.

<ul>
<li>Last El Niño was one of the strongest on record, and typically are followed by La Niña, but this transition has yet to occur. </li>
<li>Latest ONI Reading and trend shows possibility of La Niña developing in August-October, could coincide with winter. </li>
<li>Historically, adverse weather changes and high hurricane incidence are likely to spoil bearish bets against corn and lead to sustained price recovery.</li>
</ul>


Last El Niño was one of the strongest on record, and typically are followed by La Niña, but this transition has yet to occur. 
Latest ONI Reading and trend shows possibility of La Niña developing in August-October, could coincide with winter. 
Historically, adverse weather changes and high hurricane incidence are likely to spoil bearish bets against corn and lead to sustained price recovery.


Will Delayed La Niña Onset Fuel Weather Risks Firing up Corn Prices?

Archer Daniels Midland Co / Equity Bottom-Up

Archer-Daniels-Midland Company procures, transports, stores, processes, and merchandises agricultural commodities and products. The Company processes oilseeds, corn, milo, oats, barley, peanuts, and wheat. Archer-Daniels-Midland also processes produce products which have primarily two end uses including food or feed ingredients.

<ul>
<li>ADM’s Q2 results underperformed analyst expectations with both EPS and revenue missing analyst estimates.</li>
<li>Operating profit declined for Ag Services &amp; Oilseeds (ASO) and Nutrition, while Carbohydrate Solutions saw an uptick, driven by margin and volume expansion in Starches and Sweeteners.</li>
<li>ADM expects weak Q3 for AS&amp;O and Carbohydrate Solutions, with improvements expected in H2 2024. Nutrition is expected to perform strongly due to cost efficiency and volume expansion.</li>
</ul>


ADM’s Q2 results underperformed analyst expectations with both EPS and revenue missing analyst estimates.
Operating profit declined for Ag Services &amp; Oilseeds (ASO) and Nutrition, while Carbohydrate Solutions saw an uptick, driven by margin and volume expansion in Starches and Sweeteners.
ADM expects weak Q3 for AS&amp;O and Carbohydrate Solutions, with improvements expected in H2 2024. Nutrition is expected to perform strongly due to cost efficiency and volume expansion.


[Q2 Earnings Review] ADM Falls Short of Expectations on Weak Results in AS&O & Nutrition Businesses

Over twenty years of experience in capital markets covering equities, listed derivatives, physical commodities, OTC commodity derivatives, and digital assets. Straddling sell-side and buy-side with more than a decade of fluency in managing exchange listed products, OTC derivatives, and proficiency in building exchange platforms.

Our investment approach at Mint Finance blends deep fundamental research with technical & quant insights. Investment strategies developed by Mint Finance cuts across multiple asset classes with risk management embedded into every investment strategy to deliver an outsized reward-to-risk ratio.

Mint Finance's research is centered around three key themes. First, energy transition and climate change. Second, artificial intelligence. Third, shifting world order with its impact across political and monetary economics.