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The Morning Ledger: Meat Producers Hit on Flooding Concerns
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Shares of Tyson Foods and other meat producers fell Monday, as a shortage in planting has driven up the cost of corn and soybean, crops they rely on for feed. PHOTO: DANNY JOHNSTON/ASSOCIATED PRESS
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Good morning. Finance chiefs are responsible for keeping tight control over costs. But when natural disasters strike, shareholder fears can pummel a stock long before any increased costs show up on the bottom line.
That’s the case for U.S. meat producers, whose shares slumped Monday amid fears that persistent flooding in the Midwest will see millions of farm acres go unplanted with corn or soybeans, crops they rely on for feed. The shortage threatens to increase costs for meat producers such as Tyson Foods Inc., Sanderson Farms Inc. and Pilgrim’s Pride Corp., which rely on those crops to feed the chickens used for their products.
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A U.S. Department of Agriculture report released on Monday showed that through June 16, fewer acres of corn and soybeans have been planted than at this time last year. The likely shortage in planting has driven up corn and soybean futures. Corn futures are up 6.6% this month, while soybean futures are 3.8% higher, according to Dow Jones Market Data.
Risk management programs can offset the expected hit on the bottom line. Tyson Foods finance chief Stewart Glendinning told the audience at an investor conference last month that the company uses commodities hedging to lock in a portion of its feed prices and temper the sting of a sudden price surge. “But understand, as prices move up generally, you’re going to follow them. And as prices move down generally, you will follow them. It’s a matter of a lag,” he said, according to a transcript by S&P Global Market Intelligence.
The delay in planting has impacted more than just meat producers. Nitrogen fertilizer maker CF Industries Holdings Inc. also is navigating uncertainty. Its products are used to fertilize corn.
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The Washington, D.C., skyline. The district government is facing a budget impasse, with a vote scheduled for Tuesday on the certification of the district’s $15.5 billion proposed spending plan. PHOTO: J. SCOTT APPLEWHITE/ASSOCIATED PRESS
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The District of Columbia’s chief financial officer and council have reached a tentative agreement that would resolve an impasse over the district’s proposed $15.5 billion spending plan, Maria Armental reports for CFO Journal.
The two sides had battled over a proposed $49 million transfer from the reserves of the Washington Convention and Sports Authority, in part to pay for urgent public-housing repairs.
Jeffrey DeWitt, the district’s independent CFO, said the transfer would violate commitments to bondholders, whose money helped build the convention center and its hotel. Mr. DeWitt has warned that the council’s proposal could open the door for bondholders to sue the district and for credit rating firms to downgrade the district.
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The U.S. Commerce Department is scheduled to release housing-starts data for May on Tuesday. Economists surveyed by The Wall Street Journal expect housing starts increased by 0.4% in May to a seasonally adjusted annual rate of 1.23 million. Building permits are seen falling 0.5% to 1.29 million.
The Federal Reserve kicks off its two-day policy-setting meeting in Washington, D.C. Officials are expected to discuss whether worsening trade tensions and a recent slowdown in hiring and industrial activity might warrant interest rate cuts.
Adobe Inc. and Jabil Inc. are among the companies scheduled to report earnings today.
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Pfizer said on Monday it is acquiring Array BioPharma for $48 a share in cash. PHOTO: JUSTIN LANE/EPA-EFE/REX/SHUTTERSTOCK
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Pfizer Inc. agreed to buy Array BioPharma Inc. for $10.64 billion in cash, as one of the world’s biggest pharmaceutical companies seeks to expand its cancer lineup with targeted therapies.
General Electric Co. is having to redesign an engine part for Boeing Co.’s new 777X long-haul jetliner, meaning a delay for its first test flight and potentially for the first delivery of the plane to airline customers.
Facebook Inc. formally announced plans to launch a cryptocurrency called Libra, promising a secure blockchain-based payment system backed by hard assets and designed for mainstream users.
Makers of luxury goods from liquor to perfume think they have found the antidote to the fading American shopping mall: airport terminals.
United States Steel Corp. Clairton Plant, the biggest coke plant in the U.S., was operating Monday with limited pollution controls after the second fire in nearly six months broke out at the facility, prompting a warning by county health officials to residents.
Global auction house Sotheby’s has agreed to be taken private by art collector and media entrepreneur Patrick Drahi in a $2.66 billion deal.
Apple Inc. has shown willingness to help Japan Display Inc., a Japan-based display maker that is struggling because of sluggish iPhone sales, said people involved in the discussions.
Eleven banks, including Citigroup Inc., France’s Société Générale SA and Norway’s DNB AS A, say they will take climate considerations into account when extending new shipping loans.
Private-equity firm Cerberus Capital Management LP is in talks to make its first investment in Mongolia as part of a broader push into the world’s riskiest markets.
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Hudson’s Bay CFO to Take Medical Leave
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Hudson’s Bay Co.’s finance chief is taking a medical leave of absence, the company said Monday.
CFO Ed Record’s absence is effective starting Monday. He will be replaced temporarily by Becky Roof, who is currently a managing director with the consulting firm AlixPartners LLP.
The announcement comes after a group of Hudson's Bay investors last week went public with a plan to take the company, which owns the Saks Fifth Avenue and Lord & Taylor chains, private. The company previously put its Lord & Taylor department store chain up for sale.
—Suzanne Kapner
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Traders last week at the New York Stock Exchange, which recently proposed relaxing some rules related to blank-check companies. PHOTO: MICHAEL NAGLE/BLOOMBERG NEWS
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The Securities and Exchange Commission is cooling off the race to bring more blank-check companies to U.S. investors, after a string of controversial episodes involving such firms.
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A group of five television station owners on Monday agreed to settle Justice Department charges that they used third-party firms to illegally coordinate on sales of local advertising spots.
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KPMG LLP agreed to pay the Securities and Exchange Commission a $50 million fine related to allegations that former employees got an unlawful sneak peek at regulators’ plans to inspect its work and auditors at the firm cheated on internal training exams.
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U.S. aviation regulators unveiled plans to ease noise restrictions for testing proposed supersonic commercial planes in American skies, part of a broader initiative to promote development of such technology.
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The Federal Reserve Bank of San Francisco wants banks to get extra credit for making loans that help communities adapt to climate change and prepare for future natural disasters.
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Recently a diverse group of businesses, including the food retailer Smart & Final Grocery, have revised loan sales to offer them with deeper price discounts, higher interest rates and stronger investor protections known as covenants. PHOTO: MIKE BLAKE/REUTERS
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Some lower-rated businesses are being forced to pay up to complete new debt offerings even as others attract robust demand for their bonds and loans, a sign the debt market is bifurcating at a time of increased uncertainty about the economic outlook.
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After more than a decade of growing ties, the U.S. and India have suddenly hit a rough patch, a challenge for Washington’s efforts to cultivate the world’s largest democracy as a critical counterweight to China.
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A work stoppage at a huge Chilean mine has failed to boost copper prices, indicating that investors are wary of betting on growth-sensitive commodities ahead of the G-20 summit in Japan in late June.
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Abu Dhabi airline Etihad Aviation Group appointed Andrew Macfarlane as finance chief effective this week. He succeeds Mark Powers, who left in April citing personal reasons after a little more than a year with the company.
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Mr. Macfarlane most recently worked at the Abu Dhabi Investment Authority, where he was in charge of operations, real estate and infrastructure. He joined the Abu Dhabi Sovereign Wealth Fund from Irish carrier Aer Lingus, where he held the CFO post for five years. Compensation details weren't disclosed.
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