Is Now the Time to Invest in Agriculture?

Do today’s agricultural equity opportunities offer a parallel to the bull market of 2010? During the last significant El Niño cycle in 2010, Chicago corn futures rallied 78%

Baring Asset Management 30 July, 2015 | 5:03PM

Morningstar's "Perspectives" series features investment insights from third-party contributors. Here, James Govan, Investment Manager of the Baring Global Agriculture Fund, gives his latest investment update.

We are currently living in an exciting time for the agricultural equity market that has yet to be widely recognised by investors. In particular, we do not believe the market has adequately discounted the potential impact of El Niño – a band of warm air that comes off the ocean, which can cause tropical storms – on agricultural commodity prices and what it could mean for upstream producers.

While there are a number of influencing factors to supply and prices, we believe El Niño should be supportive. Together with an upturn in M&A activity in the industry, this could provide additional benefits at a time when we are already seeing compelling valuations in the sector with an earnings outlook that we believe is superior to the wider market.

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About Author

Baring Asset Management  traces its origins to 1762 when it was established in London as a firm of merchants and merchant bankers, and now has offices spanning the world's major markets.

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