Australian Securities Exchange: Mixed results for ag stocks

Australian agribusinesses have defied market turmoil, as a horror week on the ASX comes to a close. See how ag stocks have fared.

Technology stocks have been smashed on the Australian share market but listed companies linked to agriculture have enjoyed mixed results in recent days.

The Australian Securities Exchange (ASX 200) dropped to a 16-month low on Tuesday.

The trigger for the economic downturn has been fears of a recession in the US coupled with a softening in consumer sentiment in Australia.

Wednesday and Thursday’s overall trade wasn’t as dramatic as Tuesday’s downturn with the S&P/ASX 200 index falling only 1.3 per cent.

However, agribusiness has largely been spared most of the market malaise.

Elders executive general manager Tom Russo said many investors saw the agricultural sector as a safe haven in times of uncertainty.

“While ag stocks are obviously exposed to market volatility, agricultural production is largely considered to be uncorrelated to other assets classes, like equities,” he said.

“This is driven by the consistent requirement of a growing global population — particularly on our doorstep — to access food.

“Many investors therefore see the sector as a safe haven in times of uncertainty.

“People can decide not to purchase the latest iPad or upgrade their car, however they will always need to eat. Demand for food is therefore stable and this benefit flows through the supply chain from retails back through to producers and input suppliers.”

Shares in Incitec Pivot — the largest supplier of fertilisers in Australia — rose more than 2 per cent on Wednesday with the Russia-Ukraine war exacerbating worldwide supply problems.

Last month, Incitec Pivot shares fell more than 4 per cent in one week after the company flagged plans to split its explosives unit from its fertiliser business, despite reporting record half-year profits on the same trading day.

One of the standout performers in recent weeks in agricultural commodities has been Bubs Australia.

The infant formula manufacturer’s share price has risen by more than 20 per cent in the past month after it announced it was working with the Biden administration to ship tonnes of product to the US to address a market vacuum.

In Wednesday trade, Bubs remained relatively flat after a boost on Friday when it announced a supply deal with two American supermarket chains.

Its static performance on Wednesday was mirrored by Bega, which stayed at the $4.51 mark all day.