Saturday, May 3, 2014

Lime shortage puts squeeze on businesses

WILMINGTON, Del. -- In 30 years of managing restaurants, Joe Zuber has never given so much time and attention to bargain shopping for limes.

"Limes typically are cheap," said Zuber, who owns Dos Locos Fajita & Stonegrill Mexican Restaurant in Rehoboth Beach.

The wedges of green used to be tossed on plates and smashed on the side of glasses with little thought, but many businesses have reconsidered how they use the fruit in recent weeks. Droughts and cold weather have crippled production, creating a shortage of limes and other fresh produce.

A case of 175 of the green citrus fruit typically would cost Zuber $50 to $75. Last week he was quoted a price of $175. He was relieved to get a case at $109 this week.

"Which is still absolutely crazy, and it's not like they are even high-quality limes," Zuber said. "You get what you get. They are much smaller."

Zuber has limited the fruit to those who request it. But it's not an item the restaurant can forgo. On a normal weekend, Zuber plans for two to four cases of limes. This weekend, leading up to Cinco de Mayo, he stocked six.

To help save the limes for businesses that need them, the city of Wilmington's Cinco de Mayo celebration does not plan to use a lot of them. They are hopeful the frozen margaritas they offer will have the zing of lime without the addition of a fresh slice of fruit.

But, said Ken Briscoe, the city's director of cultural affairs, "Cinco de Mayo is nothing without limes, and margaritas are nothing without limes."

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A touchy market

The high cost of limes serves as an example of how fresh produce is a commodity that is especially susceptible to dramatic price changes. A cold winter in Florida harmed citrus production, and drought conditions in California have further exasperated the problem.

"It's really a function of supply and demand," said E! d Kee, Delaware's secretary of agriculture.

When weather harms production, there's not a fast way to make more, so prices run high. When the market is flooded with the product, the price is low so it moves off the shelf before it spoils. Unlike corn or wheat, fresh produce can't be stored for future use, which would smooth spikes in price.

"They are all perishable commodities so there is a tremendous pressure to sell them as soon as possible," Kee said.

And as prices go up, businesses like restaurants need to find ways to adapt. That means raising prices or changing what is offered.

When Jose Garcilazo picked up a bag of limes on Friday, it was less than he might typically buy. At Garcilazo's Mexican restaurant, Healthy Organic Planet, limes are now an on-demand item, rather than an automatic, for many dishes and drinks.

"It is how I can keep low prices for my customer," he said.

At Klondike Kate's in Newark, limes remain on drinks that require a lime – such as a gin and tonic – but they are not being used on every rum and coke.

A high-end garnish

A grocer in the Hockessin area was selling them three for $5. At the Newark Farmers Market, which used to sell them five or six for $1, the fruit is now priced at two for $1. In other words, a guest who is served a drink with a lime should thank the host for her generosity.

Nationally, the cost of all fresh fruits and vegetables is expected to increase between 3.5 percent and 4.5 percent, according to a forecast released last month by the U.S. Department of Agriculture Economic Research Service. A drought in California is expected to have such a big impact on prices of many items, including milk, that the federal agriculture department has devoted a section of its website to the issue.

In Delaware, it's not all bad new

s. Although there was some fear that cold nights harmed blooms on peach and apple trees, they appear to have made it through undamaged.

"I think we can look forward to a! decent p! each and apple crop," Kee said.

Friday, May 2, 2014

KBW: Berkshire Hathaway Disclosure Isn’t “Keeping Up With Its $300 Billion Market Cap”

Berkshire Hathaway’s (BRK.B) Warren Buffett reputation as both a stock picker and an above-board manager of money has made him nearly a god, to the point where he is often above reproach.

ASSOCIATED PRESS

That hasn’t stopped KBW’s Meyer Shields and team from raising some pointed criticisms in a report released yestedardy. They explain their dissatisfaction with Berkshire Hathaway:

Another year, another missing invitation to Omaha. While we can't know for sure, we presume our exclusion from the panel from which Warren Buffett and Charlie Munger select analysts to ask questions at Berkshire Hathaway's annual meeting has something to do with our occasionally critical analysis. We have some operational questions, of course, but more important, we caution investors to consider whether this apparent message control limits their understanding of a company whose disclosure isn't, in our opinion, keeping up with its $300 billion market cap size. This is especially important in light of succession concerns that surround the stock.

What kind of issues does Shields and team see? One example: They find Berkshire’s choice of State Farm as a comparison misleading:

For the past several years, Berkshire has contrasted its own cost-free float provided by profitable underwriting against the industry's (unimpressive) tendency to lose money on underwriting while generating net returns from investment income. So far, so good. Less edifying, though, is the repeated contrast of Berkshire's track record of profitability to State Farm's…even though, as a mutual company, State Farm's profitability goals are inherently different from for-profit insurers like Berkshire. It's true that through year-end 2013, Berkshire's underwriters have "now operated at an underwriting profit for eleven consecutive years," but so have ACE (ACE), American Financial (AFG),  AmTrust Financial (AFSI), Arch Capital (ACGL), Chubb (CB), HCC (HCC), Progressive (PGR), RLI (RLI), and W.R. Berkley (WRB), any or all of whom provide a more meaningful comparison than contrasting Berkshire's results to a company that's not out to produce a profit in the first place.

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Shares of Berkshire Hathaway have dropped 0.7% to $128.07 today at 3:15 p.m., while AmTrust Financial has gained 2.3% to $42.86, Progressive has fallen 0.9% to $24.75, Arch Capital has declined 0.9% to $57.05 and Ace has ticked up 0.1% to $102.08.

Wednesday, April 30, 2014

U.S. Steel: “Sizable Negative Impact” From Outages, Nomura Says

U.S. Steel (X) has dropped this morning after the U.S. steel giant beat earnings forecasts but offered disappointing second-quarter guidance.

Reuters

US Steel reported a profit of 34 cents a share, beating the Street consensus for 32 cents, but said it would have a tough time during the second quarter.

JPMorgan’s Michael Gambardella says even the beat isn’t as good as it looks:

U.S. Steel’s 1Q14 earnings fell short of expectations, after excluding a one-time $0.10 gain from headline EPS, and management guided 2Q14 net income to a loss in large part from the impact of recent outages at the company's Gary and Great Lakes facilities which we previously estimated at 45% of Flat-Rolled capacity. We believe the loss in Flat-Rolled will still come as a negative surprise to the market which just began revising 2Q14 earnings expectations lower in recent weeks.

Nomura’s Curt Woodworth and team explain why the outages are such bad news:

Reduced volume should contribute to higher unit costs and limit X's ability to sell into a strong spot sheet market, where prices have reached close to $700/ton, as contract volumes take priority. The outages in 2Q are also expected to negatively impact the mix away from coated automotive products, a high margin product category. X didn't quantify the transitory impact from the recent outages; however, we estimate a sizable negative impact given the significant economies of scale at the affected plants.

Shares of U.S. Steel have dropped 2.9% to 25.57 at 10:03 a.m. but don’t seem to have impact other steel stocks much, if at all. Steel Dynamics (STLD) has dropped 0.6% to $18.07, while Nucor (NUE) has dipped 0.2% to $51.56. ArcelorMittal (MT), however, has gained 0.2% to $16.15 and AK Steel (AKS) has risen 0.6% to $6.92.

Sunday, April 27, 2014

Best Gas Stocks To Own Right Now

Best Gas Stocks To Own Right Now: CVR Refining LP (CVRR)

CVR Refining, LP, incorporated on September 17, 2012, is an energy limited partnership with refining and related logistics assets that operates in the mid-continent region. As of January 8, 2013, the Company owned two of only seven refineries in the underserved Group 3 of the PADD II region of the United States. It owns and operates a 115,000 barrels per day (bpd) coking medium-sour crude oil refinery in Coffeyville, Kansas and a 70,000 bpd medium complexity crude oil refinery in Wynnewood, Oklahoma capable of processing 20,000 bpd of light sour crude oils (within its 70,000 bpd capacity). In addition, it also controls and operates supporting logistics assets, including approximately 350 miles of owned pipelines, over 125 owned crude oil transports, a network of strategically located crude oil gathering tank farms, and over six million barrels of owned and leased crude oil storage capacity. On December 15, 2011, the Company's subsidiary Coffeyville Resources, LLC (Coffey ville Resources) acquired Wynnewood Energy Company, LLC, formerly Gary-Williams Energy Corporation.

The Company's Coffeyville and Wynnewood refineries are located approximately 100 miles and 130 miles from the crude oil hub at Cushing, Oklahoma. As of January 8, 2013, the Company gathered approximately 50,000 bpd of price-advantaged crudes from its gathering area, which includes Kansas, Nebraska, Oklahoma, Missouri and Texas. The Company also has 35,000 bpd of contracted capacity on the Keystone and Spearhead pipelines that allows it to supply price-advantaged Canadian and Bakken crudes to its refineries. As of January 8, 2013, the Company had 145,000 bpd pipeline system that transports crude oil from its Broome Station tank farm to its Coffeyville refinery, as well as a total of 6 million barrels of owned and leased crude oil storage capacity, including approximately 6%! of the total crude oil storage capacity at Cushing.

Advisors' Opinion:
  • [By Susan J. Aluise]

    CVI is structured into two Managed Limited Partnerships (MLPs): CVR Refining (CVRR) and the nitrogen fertilizer unit CVR Partners (UAN). CVR Energy owns 71% of CVR Refining and 53% of CVR Partners. This is an interesting play in the energy sector, given UAN's lower cost of ammonia and urea ammonium nitrate and CVRR's edge as an MLP refiner.

  • [By Robert Rapier]

    Icahn Enterprises (NASDAQ: IEP) led all MLPs in 2013 with a capital gain of 136 percent. IEP is an unconventional MLP involved in nine primary business segments: Investment, Automotive, Energy, Gaming, Railcar, Food Packaging, Metals, Real Estate and Home Fashion. IEP invests in energy-related companies such as CVR Refining (NYSE: CVRR) and American Railcar Industries (Nasdaq: ARII), but nearly 60 percent of its assets are invested in the automotive sector and in investment funds. Since 2000, IEP has achieved an average annual return of 23.8 percent, and units currently yield 4.4 percent. MLP Profits subscribers had a chance at a 58 percent capital gain between the Sept. 9 Buy recommendation for IEP and its Dec. 16 liquidation from the Aggressive Portfolio.

  • source from Top Stocks Blog:http://www.topstocksblog.com/best-gas-stocks-to-own-right-now-3.html

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