Agribusiness still best bet

Australia’s listed agribusiness sector has recorded another consecutive month of solid growth, and with its year-on-year returns outstripping the broader market, the outlook for agri-stocks remains strong.

According to the April Commonwealth Bank Agri Indicators Report, the agri sector rewarded investors with a respectable return of 2 per cent in the past month. However, it is the first time since monitoring began in November 2007 that returns have fallen short of the broader market at 6.8 per cent.

Commonwealth Bank executive general manager agribusiness Jon Sutton said while April’s results indicated positive signs of recovery for the S&P ASX 200, the agribusiness sector remained one to watch.

“The recovery we have seen in the broader market this past month is off the back of extended periods of extreme lows — the agribusiness on the other hand has continued in a steady upwards trajectory,” he said.

“Longer term, the outlook for agribusiness is still very positive and year on year it continues to significantly outperform the S&P ASX 200.”

According to Sutton, over the past 12 months, investors in the agri sectors have reaped returns totalling 37.5 per cent, compared with -6.6 per cent in the broader S&P ASX 200.

“Looking ahead to the coming year, this trend is set to continue, with forecast returns in the agri sector expected to be around 36 per cent, compared to just 19 per cent across the wider market.

“The strong performance for this sector and its resilience in a troubled market is being recognised by the market across the globe. We have seen a definite increase in interest from international fund managers to invest in Australian agriculture.”