Solid liquidity will help the U.S. agribusiness sector maintain its stability through 2009, according to Fitch Ratings' U.S. Agribusiness Outlook. Well-diversified product lines and vast geographic footprints will also support the sector through the global demand slowdown. Agribusiness companies' internally generated liquidity and cash flow have improved dramatically since mid-year 2008 as agricultural commodity prices have tumbled from their peaks.

"Credit metrics are currently strong for the investment-grade agribusiness sector and they are well positioned if earnings weaken during the recessionary period," said Judi Rossetti, Director at Fitch Ratings. "With commodity prices reduced over the last several months, agribusiness companies have benefited from a corresponding reduction in working capital and short-term debt used to finance that working capital."

Fitch states that earnings in several sub-segments of agribusiness companies will be pressured in 2009, as global demand has diminished with weak economic conditions:

- Demand for U.S. soybean meal has slowed substantially due to production cutbacks by protein processors;

- Ethanol production is suffering from weak margins due to industry overexpansion as well as a sharp decline in gasoline price;

- High net corn costs are affecting the entire corn processing chain; and

- Fertilizer results are impeded by slow sales and declining prices.

"If earnings from several key segments concurrently generate sustained lower earnings, liquidity diminishes and credit metrics weaken materially, ratings downgrades could occur," said Wesley E. Moultrie, II, Sr. Director at Fitch Ratings.