UAP Holdings (UAPH) is a specialty chemical distributor for the agriculture industry. It does not produce what it distributes, which are primarily herbicides, insecticides, fungicides and other minerals with boron, calcium, and iron.

Rising chemical prices help UAPH as they can sell inventory at higher prices. Conversely, when the company pays a certain price of a chemical and then the price of the market price of the chemical later declines, their profit margins are hurt.

Farmers' increasing focus on corn for ethanol, actually reduces demand for products distributed by UAPH because corn is a relatively simple grain to grow. It requires less fertilizer and attracts fewer insects and fungus. Perhaps this because many other plants grow lower to the ground and trap moisture. Corn may also not be a nutritionally rich as other plants.

When the weather is dry and warm, many of the insects, herbs, pests, and fungus do not grow as well; as a result, the control products distributed by UAPH are in less demand.

As UAPH is only a distributor of what is demanded by the aggriculture industry. So break through products or treatments can directly benefit UAPH. Other than inventory in the store, UAPH has no product exposure per se. Though if they order large quantities of a certain item, rebates from the actual producer can be significant.

References