Agriculture stocks are beating their global peers this quarter as extreme weather, the war in Ukraine and rising protectionism drive up food prices. Exposure to the sector is a good hedge for inflation, some investors say.
An index tracking total returns from select agricultural producers has outperformed the broader MCSI World Index by about three percentage points since the start of July, data compiled by Bloomberg show. The industry has outperformed as a gauge of food commodity prices posted its biggest gain in 16 months last month.
There are plenty of reasons to think prices will keep climbing. A food-supply crisis is one of the top four threats facing the world this year, according to the World Economic Forum’s Global Risks Report 2023 published in January. Specifically, producers in Asia “should benefit from higher raw material prices,” said Minyue Liu, an investment specialist for Asian and Greater China equities at BNP Paribas Asset in Hong Kong.
Some of the food-trading stocks that may benefit from higher prices include Australia’s GrainCorp Ltd., Singapore-listed Wilmar International Ltd., and India’s Shree Renuka Sugars Ltd. and rice producer KRBL Ltd.Other firms set to profit from food inflation may be supermarkets and discount retailers, according to Janus Henderson Investors.
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