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Food sustains life and transcends borders and political ideologies, while agricultural products feed the world. Crops grow in regions where climate, water availability and soil support and allow them to thrive.
Every year is a new adventure in the market of agricultural goods, as farmers in early spring plant seeds that become grain and oilseeds that feed the world after the autumn harvest.
At the beginning of the 2022 harvest year in the Northern Hemisphere, prices for critical agricultural commodities are close to record highs. With rising inflation and a significant war raging in Europe, the potential for even higher prices and deficits is at its highest in recent years.
Spring and early summer are a season of uncertainty
Inflation ignited bullish passion in agricultural commodities
- In 2022, the highest inflation in the last four decades led to an increase in production costs.
- Land prices, labor costs, seeds, labor, equipment, energy and other costs have increased.
- In 2022, farmers face record high production costs.
- Crop prices must keep pace with costs to make the economy economical.
The war in Ukraine is a unique threat
- Ukraine and Russia export a third of the world’s wheat.
- Ukraine is a significant producer and exporter of corn.
- Oil prices at $ 100 a barrel are increasing demand for corn-based ethanol and soy-based biodiesel.
- Russia has imposed a “temporary” ban on the export of fertilizers, increasing the cost of crop production and creating scarce supplies for farmers in early 2022 harvest year.
- While prices in the US may rise, in other areas there may be shortages that will lead to famine and political turmoil.
ABCD agricultural companies will benefit from rising crop prices
- The leading integrated agricultural companies worldwide are the ABCD Group.
- Archer Daniels Midland ( ADM) is the world’s supermarket.
- Bunge Limited (COM) BG) is a leader in agriculture with great interests in the United States and Brazil, the two leading crop producers.
- Cargill is a private leader in agriculture.
- Louis Dreyfus is another private agricultural company.
Archer Daniels Midland and Bunge are public agricultural giants
- Shares of ADM rose in 2022 from $ 67.59 on December 31, 2022 to $ 91.17 per share on April 1, up 34.9%.
- Shares of BG rose from $ 93.36 on December 31, 2021 to $ 112.78 on April 1, 2022, an increase of 20.8%.
- On March 25, 2022, ADM reached an all-time high of $ 93.50.
- BG on March 25 rose to a maximum of 117.45 dollars, which is the highest figure since June 2008. In January 2008, the maximum price for all time was $ 135.00.
- Rising food prices could be bullish for ADM, BG and other ABCD companies.
- Rising food prices are pushing inflation higher and often leading to geopolitical instability.
Thanks for reading, and stay tuned for the next edition of Tradier Rundown!
Stock News Contributor: Tradier Inc.
Source: Stock news
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