How Will Agricultural Stocks React to Rising Food Prices?

Many factors -- including the higher price of oil, poor weather reports from around the globe, and strong demand from Asia -- are pushing the price of food higher on a global scale. The World Bank food price index showed an increase of 8% in the cost of food between December and March, according to Reuters.

Prices had declined the previous four months, and food prices still remain 1% below a year ago and 6% below the historical peak in February of 2011. Otaviano Canuto, the VP for poverty reduction and economic management, said that the increase is "threatening the food security of millions of people." The World Bank said that the price indexes of grains, fats, oils, and many other foods have been increasing since January of this year.

One of the foods that hasn't increased, though, is rice. Its decrease is due to abundant supplies and strong competition among the exporters.


If the prices continue to increase, the higher levels will need close monitoring and there is a possibility of social unrest in some countries similar to what resulted after the food and energy price crisis in 2008-2009. However, the World Bank said it was hard to predict whether the price increase would lead to a global food crisis because there is no known mechanism to identify the onset of one.

Business section: Investing ideas
Food price changes will likely affect most companies in the agriculture industry, though different businesses will be affected differently. Below is a list of agriculture stocks that could see the affects of price increases. How do you think their stock prices will move in response?

List sorted by market cap. (Click here to access free, interactive tools to analyze these ideas.)

1. Monsanto: Provides agricultural products for farmers in the United States and internationally. The company has a market cap of $40.98 billion and a most recent closing price at $76.99.

2. PotashCorp (NYS: POT) : Produces and sells fertilizers and related industrial and feed products primarily in the United States and Canada. The company has a market cap of $37.07 billion and a most recent closing price at $44.64.

3. Syngenta: Engages in the discovery, development, manufacture, and marketing of a range of products designed to enhance crop yields and food quality worldwide. The company has a market cap of $31.95 billion and a most recent closing price at $71.10.

4. Agrium: Produces and markets agricultural nutrients, industrial products, and specialty products worldwide, as well as involves in the retail supply of agricultural products and services in North and South Americas and Australia. The company has a market cap of $13.92 billion and a most recent closing price at $88.40.

5. CF Industries Holdings (NYS: CF) : Through its subsidiary, CF Industries, it manufactures and distributes nitrogen and phosphate fertilizer products, serving agricultural and industrial customers worldwide. The company has a market cap of $12.59 billion and a most recent closing price at $189.98.

6. Terra Nitrogen Company (NYS: TNH) : Produces and distributes nitrogen fertilizer products to agricultural and industrial customers. The company has a market cap of $5.21 billion and a most recent closing price at $277.31.

7. Scotts Miracle-Gro: The company, together with its subsidiaries, is engaged in the manufacture of lawn and garden care products. The company has a market cap of $3.18 billion and a most recent closing price at $52.19.

8. CVR Partners (NYS: UAN) : Engages in the production of nitrogen fertilizers including ammonia and urea ammonium nitrate. The company has a market cap of $2.0 billion and a most recent closing price at $27.21.

9. Intrepid Potash: Engages in the production and marketing of muriate of potash and langbeinite under the Trio brand name, primarily in the United States. The company has a market cap of $1.84 billion and a most recent closing price at $24.10.

10. Rentech Nitrogen Partners (NYS: RNF) : Engages in the production of natural gas-based nitrogen fertilizer and industrial products for agricultural uses. The company has a market cap of $1.08 billion and a most recent closing price at $28.24.

Interactive Chart: Press Play to compare changes in analyst ratings over the last two years for the stocks mentioned above. Analyst ratings sourced from Zacks Investment Research.


 

At the time this article was published Kapitall's Danny Guttridge does not own shares of the companies mentioned above. The Motley Fool owns shares of CF Industries Holdings. Motley Fool newsletter services have recommended buying shares of Scotts Miracle-Gro, PotashCorp, and Syngenta, as well as creating a modified stock repair against synthetic long position in Monsanto. The Motley Fool has a disclosure policy.
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