3 Agriculture Stocks To Buy With The Commodity Bull Market Raging

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The prices of most agricultural commodities recovered remarkably in the second half of 2020 following positive developments on the COVID-19 vaccine front. This is evidenced by Invesco DB Commodity Index Tracking ETFs (DBC) more than 18% gain in the second half of 2020 following a 23% decline in the first half. In fact, DBC has returned 46% over the past year. The recovery pace of agriculture commodities has also been remarkable as reflected in by Invesco DB Agriculture ETF’s (DBA) 14.7% gain over the past year.

One of the major reasons behind the bullish commodity market is rock bottom interest rates, which have heightened inflation expectations. This is leading more money into the commodity markets.

U.S. food producers faced many challenges in 2020.  But the U.S. Department of Agriculture (USDA) came to the rescue with several relief measures to offset losses and stabilize markets. These included the Coronavirus Food Assistance Program (CFAP) that delivered more than $23 billion in direct payments to help compensate farmers, and the Farmers to Families Food Box Program that linked farmers to consumers, distributing more than 100 million boxes of food to people in need. Now, the re-emergence of China as an important buyer of agricultural products is further driving the commodity prices up. Recent weakness in the U.S. dollar is also driving increased international trade in agricultural commodities.

Against this backdrop, we think agricultural companies Archer-Daniels-Midland Company (ADM - Get Rating), Nutrien Ltd. (NTR - Get Rating), and The Mosaic Company (MOS - Get Rating) are well-positioned to deliver significant returns in the coming months.

Archer-Daniels-Midland Company (ADM - Get Rating)

ADM, a premier agricultural origination and processing company, is a global leader in human and animal nutrition. The company processes oilseeds, corn, wheat, cocoa, and other agricultural commodities. It operates through three segments: Agricultural Services and Oilseeds, Carbohydrate Solutions, and Nutrition.

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