Rising food prices, driven in-part by supply shortages and logistics disruptions, have been motivating agricultural companies to deliver better crop quality and yield. As crop prices rise further given the harsh weather conditions threatening existing crop supplies, we believe agricultural companies Mosaic (MOS), Bunge (NYSE:BG), CF Industries (CF) and Intrepid (IPI) will attain improving profit margins on existing inventories. Let’s discuss.Food prices have been rising over the past couple of months due to crop failures in China and heat waves in the United States. This, coupled with supply chain bottlenecks, has caused the consumer price index to rise 5.4% year-over-year in June, its highest monthly gain since August 2008.
The introduction of technology in agricultural operations and the use of good-quality fertilizers to get better crop quality and yield should help agricultural stocks to grow substantially.
Given this backdrop, we believe it is wise to invest now in fundamentally sound agricultural names The Mosaic Company (NYSE:MOS), Bunge Limited (BG), CF Industries Holdings, Inc. (NYSE:CF), and Intrepid Potash, Inc. (NYSE:IPI).