The Elders Ltd (ASX: ELD) share price is sliding today, down 2.33% in early afternoon trading.
At $12.07, the Elders share price hit its 2020 peak on 20 October. At the time, Elders shares were up 87% for the year. Since then, shares have retraced around 17%. Still, that leaves the share price up an impressive 56% year to date.
By comparison, the broader S&P/ASX 200 Index (ASX: XJO) is flat for the year.
And the latest data from the Australian Bureau of Agricultural and Resource Economics and Sciences (ABARES) could see Elders continue to outperform into 2021.
We’ll look at that below. But first…
What does Elders do?
Elders Ltd provides a range of services to customers working in the agricultural industry. These services include finance, banking and home loans, real estate, insurance and rural services.
Founded in 1839, Elders has grown to become the country’s largest listed rural services provider and agribusiness. Elders shares first began trading on the Australian exchange in 1981.
What did ABARES report that could boost the Elders share price?
In its December quarter agriculture commodities report, ADARES forecast Australia’s farmgate value is likely to reach $65 billion in 2020/21. This comes following our second largest winter crop and with seasonal rainfall predicted to be promising.
Commenting on the findings, ABARES executive director Steve Hatfield-Dodds stated:
We’re expecting a near all-time high winter crop, the best ever in New South Wales, and a more favourable outlook for summer cropping than we have seen in recent years. Livestock prices have also stayed high with herd and flock rebuilding, and continued international demand.
While ABARES predicts that farm production will increase 7%, to $65 billion, it expects export values to fall by 7%, down to $44.7 billion.
Part of the export drop is attributed to the lingering effect of past dry seasons. But Hatfield-Dodds also points to trade uncertainties, particularly with China, as likely to drag on agricultural exports, saying, “There are a number of risks present for the rest of 2021 that remain a watch point, including wine trade with China and labour shortages for the horticulture sector.”
Trade and labour issues will remain a wild card moving into 2021. But with a bumper winter crop and potentially strong summer crop, it will be interesting to see how the Elders share price performs moving forward.
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Motley Fool contributor Bernd Struben has no position in any of the stocks mentioned. The Motley Fool Australia has recommended Elders Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.
The post Will this $65 billion bonanza turbocharge the Elders (ASX:ELD) share price? appeared first on The Motley Fool Australia.
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