Agribusiness outperforms – AAG

Listed agribusiness stocks have outperformed the All Ordinaries index, delivering a 79.5 per cent return, according to research house AAG.

The result for the 2008 financial year compares to the All Ordinaries delivering a minus 15.5 per cent return.

AAG research director Tim Lee said stocks such as Incitec Pivot delivered a 132 per cent return for the 12 months ending June.

“We have again seen the agribusiness sector grow in volatile market conditions and again outperform the All Ordinaries,” he said

“Investors are certainly watching agriculture closely, which is not surprising considering the attention on the soft commodity boom.”

Lee said the sector had been affected by market volatility during the year, with Clover Corporation shares increasing by 18 per cent on June 30 after announcing a better than expected result.

On the flip side, Great Southern’s share price fell 78 per cent during the year.

“Great Southern is suffering from the uncertainty surrounding the tax rulings on non-timber managed investment schemes rather than it being a reflection of the quality of the underlying business,” he said.

The strong price of soft commodities such as wheat still have to work through the system and be reflected in agribusiness producers’ share prices, Lee said.

“There’s a lot of uncertainty [regarding] the harvest in parts of Queensland and News South Wales and some analysts have downgraded predictions from Western Australia,” he said.

“But many companies are now positioning themselves to take advantage of increased commodity prices, which won’t be apparent until after the harvest has ended.

“By that time I would expect to see some of the agribusiness producers starting to shine.”