Jefferies Flags Six Consumer Stocks at Risk From Super El Niño

The National Climate Center issued a bulletin on the morning of October 9 stating that a super El Niño event officially formed this September. Affected by this, the A-share agricultural sector continued to rally that afternoon. As of press time, Dunhuang Seed, Jinjian Rice, and Wanxiang Doneed hit the daily limit up, Shennong Seed rose more than 10 percent, and Qiule Seed rose more than 15 percent intraday. The National Climate Center said that since May this year, the central and eastern equatorial Pacific has entered an El Niño state, and from May to September the sea surface temperature index in the key region showed a rapid warming and sustained trend. Earlier warnings about a super El Niño event have repeatedly triggered collective gains in A-share agricultural stocks, as the market expects the El Niño phenomenon may disrupt global food production and push up agricultural product prices. A research report released by CICC on September 18 said that since 1960, strong and super El Niño events have most likely led to reduced global corn and palm oil production.

FMC Corporation has submitted its regulatory dossier for rimisoxafen, the first dual mode of action herbicide, to Brazilian authorities, targeting resistant broadleaf weeds in major soybean and corn markets. The Brazil submission is the second global filing for rimisoxafen, following an earlier filing with the U.S. Environmental Protection Agency, and advances the company's pipeline of new proprietary herbicides. The move connects to FMC's recent exclusive supply and license agreement with Corteva around rimisoxafen, which includes a US$200 million pre-purchase and provides a commercialization pathway in corn and soybeans. FMC's narrative projects $3.9 billion in revenue and $313.5 million in earnings by 2029, requiring 6.6% yearly revenue growth and about a $3.0 billion earnings increase from -$2.7 billion today. The lowest analyst estimate assumes revenue of about US$3.8 billion and earnings of roughly US$335.0 million by 2029, citing the long, uncertain approval path for products like rimisoxafen as a key reason profits could lag.

J.P. Morgan upgraded Corteva to Overweight from Neutral on Tuesday, arguing that the agricultural-chemicals company left behind after the spinoff of its seed business is undervalued and has a stronger financial profile than its share price suggests. Lead analyst Jeffrey J. Zekauskas set a December 2027 price target of $19, compared with Corteva's Oct. 5 closing price of $12.39, implying upside of about 53%; the sharp reduction from J.P. Morgan's previous $83 target reflects the separation of Corteva's seed business into Vylor rather than a comparable collapse in the bank's assessment of the underlying company. The new Corteva consists of the former company's crop-chemicals operations, which J.P. Morgan estimates has a gross margin of about 38%, ebitda margins of 16.5% to 17% and negligible net debt, with the shares trading at roughly 5.7 times estimated 2027 ebitda, about one turn below rival FMC despite FMC carrying substantially more leverage. Zekauskas estimates a high-quality crop-chemicals business could ordinarily warrant about 10 times 2027 ebitda, equivalent to roughly $21 a share before environmental liabilities, but J.P. Morgan uses a more conservative 9-times multiple to reach its $19 target, accounting for uncertainty over PFAS and PFOA liabilities inherited from the former DuPont structure; it models a conservative scenario in which combined liabilities for DuPont, Chemours and Corteva reach $8 billion, twice the existing $4 billion framework, putting Corteva's responsibility at about $1.3 billion, or roughly $2 a share. J.P. Morgan forecasts Corteva revenue rising from $7.87 billion in 2026 to $8.10 billion in 2027, adjusted ebitda increasing from $1.28 billion to $1.37 billion, adjusted EPS climbing 31.6% to 85 cents in 2027 and free cash flow to the firm jumping to $542 million from an estimated $63 million this year, with potential catalysts including $300 million in run-rate savings targeted from 2024 through 2027 and $500 million by 2029, plus a recovery in grain prices.