Companies that process crops benefit when drought or wars such as the Russia/Ukraine conflict create shortages in parts of the world.

Prices for food-related commodities including wheat, corn and soybeans remain elevated on a five-year view, though they have softened since Russia agreed for grain exports to resume through the Black Sea.

Against a backdrop of supply shortages and food inflation, select agriculture-related companies are in demand with investors and news flow remains positive.

Shares in German fertiliser supplier K+S (SDF:ETR) are up almost 45% year-to-date while tractor maker and agricultural equipment seller Deere (DE:NYSE) has harvested a 16% gain.

On a streak of beating earnings estimates is global grains merchant Archer-Daniels Midland (ADM:NYSE), the dividend aristocrat which recently announced (25 Oct) its strongest third quarter profit on record and raised full year earnings guidance off the back of robust demand for grain and oilseeds and tight supplies. CEO Juan Luciano insisted Archer-Daniels Midland is ‘well positioned to end 2022 strong, and carry that momentum into 2023’.

On 26 October, American agribusiness Bunge (BG:NYSE), the soybean exporter also involved in food processing, grain trading and fertiliser, lifted its 2022 earnings per share outlook after reporting a strong third quarter performance in its refined and specialty oils business.

Corteva Agriscience (CTVA:NYSE) shares are testing new highs, as the agricultural chemical-to-seed company benefits from farmers seeking to maximise yields at a time of low global grain supplies, and on 3 November the company raised the mid-point of its full year operating EBITDA guidance following a strong third quarter. CEO Chuck Magro said the ‘outlook for ag fundamentals is strong’ and believes farmers will ‘continue to prioritise top-tier technologies to increase productivity on the farm’.

On the UK stock market, agricultural supplies group Wynnstay (WYN:AIM) has upgraded profit guidance for the year to October 2022 once again after favourable trading conditions continued in September and October across all core activities.

The £140 million cap, whose farmer customers have more money to spend when milk prices are high, has seen sustained outperformance in its arable business (grain, seed and fertiliser products).

Also trading well is feed, food and fuel distributor NWF (NWF:AIM), while Carr’s (CARR) has a speciality agriculture division which makes and supplies feed blocks, minerals and boluses containing trace elements and minerals for livestock.

‹ Previous2022-11-17Next ›