Investors looking to shake off the ill effects of a slowing economic recovery flocked into agricultural stocks Tuesday after BHP Billiton Ltd., the world’s biggest miner, made a US$3.9-billion pitch for Potash Corp. of Saskatchewan Inc.
The rally highlighted improving prospects for fertilizer and grain companies poised to profit substantially in the coming months from a global grain shortage that is helping drive commodity prices to levels not seen since before the financial crisis.
“The last twelve to eighteen months, nobody’s given a [care] about agriculture,” Robert Winslow, an analyst at Wellington West Capital Markets said. “But for the first time in a long time, investors are interested again. If even more capital starts flowing into the sector, we could see some really aggressive moves in share prices.”
Grain prices are up about 25% on average since June, with the primary driver, wheat, doubling in price to a two-year year high of more than US$8.00 per bushel for the September futures contract earlier in August. Tuesday it closed at US$6.57 per bushel.
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