Winners and losers on the bourse

Australian farmers are about to head into their third year of favourable climatic conditions, with the Bureau of Meteorology forecasting a third La Nina season in a row.

The wetter-than-normal conditions usually associated with a La Nina weather pattern have been supportive of the herd and flock rebuild, as well as providing some bumper cropping years.

While good weather often translates to improved farm returns, the same cannot be said for the share price performance of listed agricultural companies.

The three-year share price returns for a selection of listed companies – ranging from large organisations with market capitalisation nearing $2 billion to relative minnows with market capitalisation under $100 million – show that a good farming season doesn’t always translate to improved share price performance in the agricultural sector.

Of the three market behemoths selected, Elders holds the largest market capitalisation at $1.96 billion.

As a national agribusiness offering services in farm merchandise, wool and livestock agency, real estate, farm finance and insurance, agronomy, grain marketing and water trading, Elders has been able to capitalise on the favourable conditions supporting Australian farmers.

As a result, its share price has increased 101 per cent during the past three years.

Similarly, Graincorp’s significant footprint across Australia in the storage, handling and processing of grains and oilseeds has been beneficial to its share prices, with subsequent years of bumper harvests lifting the volume of goods transacted.

Consequently, Graincorp’s share price has lifted by 142 per cent during the past three years.

In March 2022, Sumitomo Chemical Company offloaded its 16 per cent share in Nufarm, an Australian chemical company that focuses on crop protection and specialist seed products.

News of the sale of Sumitomo’s equity holding has weighed on Nufarm’s share price despite the chemical company reporting a 41 per cent lift in first half 2022 earnings.

Nufarm’s share price has declined by 24 per cent during the past three years.

Standout performers in the $600 million to $1.1 billion market capitalisation group are cattle company AACo and feed supplier Ridley, with share price gains of 72 per cent and 9 per cent over the past three years, respectively.

Meanwhile the fruit and vegetable, nut and poultry producers in this mix haven’t fared as well.

The share price of avocado, banana, berry, mushroom, citrus and grape grower Costa Group has declined nearly 30 per cent during the past three years.

Shares in almond producer Select Harvest have fallen by a similar amount, with a 34 per cent drop.

Meanwhile, poultry producer, Inghams oversaw an 18 per cent decline in the value of its equity.

The biggest of the share price swings were reserved for the smaller capitalisation stocks, with companies under $100 million in market capitalisation showing the most volatility during the past three years.

Wide Open Agriculture, with a market cap of $57.2 million, is a company focusing on regenerative agricultural practices providing plant-based protein powders, and regenerative beef, lamb and poultry and oat milk products.

Wide Open Agriculture’s share price has risen 261 per cent in the past three years.

On the other side of the ledger, cold store logistics provider to the meat/dairy sector and fodder/hay processor and exporter, Wingara Ag, which has a market capitalisation of $11.4 million, oversaw the largest share price downturn of the selection of listed companies after posting an 78 per cent fall during the past three years.

All percentage share price returns outlined in this article reference the three-year share price change on the selected agricultural equities and don’t include dividend payments.

Furthermore, this article is general in nature and does not constitute investment advice.

Ensure you get professional advice prior to investing in commodities or the share market.

• Matt Dalgleish is co-founder and director of Episode 3 (EP3)