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Minutes of the Bank of Japans January meeting: The committee unanimously agreed that, given the significantly low level of real interest rates, it would be appropriate for the Bank of Japan to continue raising interest rates should its outlook for economic activity and prices materialize. Regarding the pace of policy adjustments, most committee members believed that decisions should be made on a case-by-case basis at each meeting.Minutes of the Bank of Japans January meeting: One member stated that the central bank need not be overly concerned about the impact on corporate performance if the pace of policy rate increases is not too rapid.Minutes of the Bank of Japans January meeting: One member stated that while the downward pressure on consumption from rising interest rates is cause for concern, its impact on the overall financial system is likely to be limited.March 25 (Futures News) – According to foreign media reports, Chicago Board of Trade (CBOT) corn futures closed slightly higher on Tuesday, with the benchmark contract rising 0.7%. Investment funds are still grappling with the uncertainty surrounding the potential war between the US and Israel against Iran. International crude oil futures rose again on Tuesday, triggering speculative buying in the corn market and pushing up corn prices. Grain and oilseed prices have recently largely followed crude oil price movements, reflecting two factors: firstly, corn and soybean oil are used in biofuel production; and secondly, investors view these crops as a hedge against inflation. The Middle East conflict has disrupted shipping in the Gulf region, causing natural gas prices to surge and impacting the fertilizer market. Furthermore, export restrictions imposed by non-Gulf region fertilizer suppliers, including Russia, could further exacerbate short-term supply shortages. Russia has suspended ammonium nitrate exports until April 21 to ensure domestic supply. Russia controls approximately 40% of the global ammonium nitrate supply.On March 25th, Goldman Sachs stated in a report that disruptions to nitrogen fertilizer supplies in the Strait of Hormuz could lead to a decline in global grain production, altering planting decisions and potentially pushing up grain prices. The report noted that fertilizer shortages could result in delayed or insufficient nitrogen fertilizer application, causing a drop in grain yields and prompting farmers to switch to crops like soybeans, which require less fertilizer. According to data from the U.S. Fertilizer Association, in some years, U.S. farmers import as much as 50% of their fertilizer. With supplies still about 25% below normal levels, spring planting could face challenges. Goldman Sachs stated that since the conflict began, nitrogen fertilizer prices, which account for about 20% of grain production costs, have risen by 40%. Supply disruptions could lead to fertilizer shortages in other regions and drive up production costs. While U.S. farmers are currently relatively unaffected due to advance pre-planting season purchases, supply disruptions in Europe, Australia, and the Southern Hemisphere could boost demand for U.S. grain exports and push up U.S. grain prices.

Exxon and Chevron Look Attractive and Set To Make Up Ground

LEO

Oct 25, 2021 13:56

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Exxon Mobil and Chevron look attractive after lagging behind gains in the exploration and production sector this year, according to one analyst.


Devin McDermott, a Morgan Stanley energy analyst, wrote in a client note that Exxon Mobil (ticker: XOM) and Chevron (CVX) now have projected 2022 free-cash flow yields of about 12%.


“This is the highest level of the past decade and greater than two times the five-year average of around 5%,” he wrote.


The free-cash flow yields of Exxon and Chevron are in line or better than those of E&P companies Pioneer Natural Resources (PXD), EOG Resources (EOG), ConocoPhillips (COP) and Devon Energy (DVN), McDermott noted.


Exxon, whose shares finished Wednesday at $63.25, is up 53% this year while Chevron, at $113.16, has risen 34%. The SPDR S&P Oil & Gas Exploration and Production exchange-traded fund (XOP) has soared 85%, to $58.50. Exxon’s dividend yield is 5.5% and Chevron, 4.7%. ‘


McDermott has an Overweight rating on Chevron with a $149 price target and Overweight rating and $84 price target for Exxon.


McDermott wrote there could be a “catch-up trade” for the two majors.


McDermott argues that Exxon and Chevron should trade at a lower free-cash flow yield than the E&P stocks because of their diversified businesses, including energy production, refining, and chemicals.


“CVX and XOM’s integration into downstream and chemicals supports more stable through-the-cycle earnings and cash flow. In essence, the oil majors offer a higher quality cash flow stream that should be capitalized at a lower yield than that of independent E&Ps. Further, recovering downstream margins could offer an outsize rate of change into 2022, in particular for XOM due to its large refining footprint,” McDermott wrote.


Exxon plans to increase carbon capture at Wyoming facility


Exxon Mobil (XOM.N) said on Thursday it plans to expand carbon capture and storage (CCS) at its LaBarge, Wyoming facility and had started the process for engineering, procurement and construction contracts for the project.


The expanded project will capture up to 1 million metric tons of carbon dioxide annually, in addition to the 6-7 million metric tons already being captured at LaBarge.


The oil major added that a final decision on the proposed $400 million investment, the latest in multiple expansions of carbon capture at LaBarge, is expected in 2022 and operations could start as early as 2025.


Earlier this year, Exxon had created a division to commercialize its technology that helps reduce carbon emissions. The company had said it would invest $3 billion on lower emission solutions through 2025, by which time it plans to reduce the intensity of its oilfield greenhouse gas emissions by 15%-20% from 2016 levels.

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