Top 5 Best Agriculture Stocks to Watch in 2024

In 2022 and 2024, the agricultural industry continues to trend upwards on its recovery, making it an interesting time to invest in the best agriculture stocks, also referred to as agricultural stocks.  

After dealing with some difficult times during the COVID pandemic, the agricultural industry is currently on the rise. Some factors, such as the recent rise in food prices, have offered a significant boost to the industry. 
 
It’s worth pointing out that the agricultural industry is massive in size. Agribusiness doesn’t refer strictly to food, but it also applies to a broad range of different businesses.  

When agriculture stocks come up, it also involves fertilizers, pesticides, farm equipment and much more. In other words, agriculture stocks are available in many different ways, which makes them a very interesting investment option. 
 
In this article, we will take a better look at what are agricultural stocks and the best agriculture stocks to watch for in 2024. 

What are Agriculture Stocks? 

As mentioned earlier, the agricultural industry has seen some ups and downs over the last two years.

Now, however, it seems to be significantly trending upwards, which can be attributed mainly to the Russia-Ukraine geopolitical conflict. But what exactly does it have to do with agriculture, and how does it affect agribusiness? 
 
Russia and Ukraine are among the world’s agricultural powerhouses. The former used to be the world’s leading exporter of grain and also the leading fertiliser supplier, while the latter was the fifth-largest grain exporter. Now, however, both countries are effectively out of the market. 
 
This has naturally led to some massive ripple effects. The most immediate one was a sudden shortage, leading to a spike in food prices. It’s worth mentioning that this trend isn’t exactly new.  

Food prices have been going up since the start of the pandemic, and the conflict has now placed an even more significant strain on supply chains. The World Bank believes that the price hike will continue until 2023 before easing off.  
 
The rise in food prices, on the other hand, boosts the industry and creates an opportunity to invest in agriculture stocks. It’s also fair to expect that agribusiness will try to improve production in order to match the increase in demand, which bodes well for agriculture stocks. 

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Advantages and Disadvantages of Agriculture Stocks 

Just like any other investment, agricultural stocks have their positives and negatives.  

For investors, it’s all about comparing the advantages and disadvantages before making a final decision on whether or not to buy agriculture stocks. 

Advantages: 

• Steady income: agriculture stocks aren’t directly related to the broader market. Its risks are completely different, such as weather, crop diseases and pests. Even if the global economy slows down, it won’t necessarily affect your agriculture stocks. Food and other agricultural industry products are always in demand. 
• Long-term investment: as a direct consequence of what we mentioned above, agriculture stocks can be seen as a long-term investment. Farms have to turn their income into crops to keep the business going, while also investing in products and new techniques to improve production. While there are still risks involved, agriculture can provide a stable source of income for a long time. 
• Social responsibility: investing in agriculture stocks helps farmers to stay in business. In turn, this also means that food production remains stable, while also creating more jobs within the agricultural industry. And considering that emerging economies also rely heavily on agriculture, investing in this industry also helps boost them. 

Disadvantages: 

• Production cycle: agriculture is a cyclical industry, with patterns of boom and busts, high prices and low prices. While it’s generally independent of the overall economic cycles, some other factors such as long droughts, floods and pests can lead to downward trends in agriculture 
• Environmental impact: it’s no secret that agriculture has a big environmental impact. Increased importance has been placed on environmental, social and governance (ESG). Sustainable practices are also in high demand. But some other practices within the agricultural industry, such as deforestation and the use of pesticides, still have a very negative impact on the environment. 

But the agricultural industry isn’t limited to food production, of course. Fertilizers are another key product to keep an eye on right now. With countries refusing to buy fertilizers from Russia, it has created new short-term opportunities for fertilizer companies.

What are the Best Agriculture Stocks to Watch? Top 5 Agricultural Stocks 

When looking at the best agriculture stocks in the UK and globally, these are some of the companies to consider: 

1. Archer-Daniels-Midland Co CFD (#ADM.US) 

ADM can be considered potentially one of the most versatile in offerings within the agricultural industry.  

The American company has different divisions, allowing it to work in different segments, which include: producing, transporting and storing raw materials; processing oilseeds into vegetable oils and protein; dry milling; serving the food and beverage markets, as well as providing feed and premix for livestock. 

Advantages 

• Solid and steady return in the long term. 
• Currently riding a 47-year streak of dividend increases. 

Disadvantages 

• Relatively low yield. 

 2. Scotts Miracle-Gro Co CFD (#SMG) 

 Scotts Miracle-Gro is a household-name company in the agricultural industry. It produces fertilizers, pesticides as well as gardening products, giving it a wide range of customers, which ranges from large producers to gardening hobbyists. 

Advantages 

• Sells products with a pattern of high seasonal demand. 
• The payout has increased by over 20% in the last three years. 

Disadvantages 

• Company growth has been trending downwards in 2022. 

Have a look below and the TradingView monthly chart of SMG:

3. Deere & Co CFD (#DE) 

Deere machinery is used in both the farm industry and construction. The American equipment manufacturer also invests heavily in innovation, including automated machinery. 

Advantages 

• It has a global presence, delivering equipment and technological solutions to a wide range of customers. 
• Constant innovation ensures that Deere remains relevant in the market. 

Disadvantages 

• Recently announced a small dip in its first quarter earnings for 2023 due to increased production costs. 

4. CNH Industrial NV CFD (#CNHI) 

CNH Industrial is also a machinery manufacturer, working with farm and construction equipment. It was formed following the mergers of Case and New Holland with Fiat Industrial. 

Advantages 

• Strong position in the US and Latin American countries, and will likely benefit from the increase in agricultural exports. 
• Solid long-term investment considering the growth in population and the consequent increased demand for the agricultural industry. 

Disadvantages 

• The recent drop in shares is due to the split from its buses and trucks unit. 

5. Tyson Foods Inc CFD (#TSN) 

Tyson Foods is an American company focused on meat and protein. As one of the world’s largest food companies, Tyson is well-positioned in a sector that always sees high demand, particularly in the US. 

Advantages 

• Meat demand remains steady despite the rise in inflation, making Tyson Foods a relatively safe option. 
• It has seen an impressive rise in profit and growth to shake off the increase in production costs. 

Disadvantages 

• Still recovering from a huge drop during the pandemic. 

How Do I Invest in the Agriculture Sector? 

The agricultural industry is both a potential long-term investment and also could provide a possible return in the short-term given the current global scenario. 
 
You can trade CFDs with a trading account or invest directly via an Invest.MT5 account with Admirals. Check out the different account types at Admirals. 
 
You can also register for a risk-free demo account and practice with virtual capital instead.

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Other Articles of Interest:

• Top 5 Best Green Hydrogen Stocks to Watch
• Top 5 Fertilizer Stocks to Watch
• Best Hydrogen Stocks to Watch

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