Elders Ltd (ASX: ELD) shares have spent the past month bouncing around the $10 per share range. The Elders share price, currently trading at $10.18 per share, is down 0.59% over the last month.
Year to date, however, Elders shareholders have enjoyed a fantastic run. The company almost shrugged off the COVID-19 induced market selloff earlier this year, with the Elders share price only falling around 10% from 24 February through to 23 March. From the start of 2020 to the time of writing, the Elders share price is up nearly 58%. And no, this isn't some upstart tech company.
Elders is part of the S&P/ASX 200 Index (ASX: XJO). By comparison the ASX 200 is down 10.6% so far in 2020.
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 agribusiness and provider of rural services. Elders shares have been listed on the ASX since 1981. After running into some trouble in 2008, the company has rebounded in recent years. It has a current market capitalisation of $1.6 billion.
Why could the Elders share price run higher from here?
As a company that caters to agricultural businesses, the Elders share price is linked to the fortunes of Australia's farms. And according to the September 2020 Australian crop report — released earlier today by the Australian Bureau of Agricultural and Resource Economics and Sciences (ABARES) — the outlook for much of Australia's agricultural output looks exceptionally strong.
The report notes that, "Favourable climatic conditions during spring are expected to support the ongoing development of winter crops and provide a good foundation for summer crops."
Regarding the winter crops, the report stated that "Winter crop production in Australia is forecast to increase by 64% in 2020–21 to 47.9 million tonnes, 20% above the 10-year average to 2019–20 of 40 million tonnes."
As far as the major winter crops are concerned, the report forecasts wheat production will increase by 91% to 28.9 million tonnes. That's 22% more than the 10-year average. Barley production is forecast to ramp up as well, up 23% from its 10-year average.
And the good news is forecast to continue for the summer crops. Though the area planted for summer crops is expected to be 11% below the 10-year average ABARES expects a 194% increase over last year.
With all this forecast year-on-year growth in Aussie agriculture, the Elders share price could be in for some more big gains in the months ahead.
