ASX 200 shares in this sector could be poised to boom in the coming year

The federal government's ABARES believes this sector is about to see record profits.

| More on:
happy farming couple both with their thumbs up

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

This Australian industry is forecast to see record profits this year. Here's what S&P/ASX 200 Index (ASX: XJO) shares investors might want to keep an eye on over the coming year.

Could these be the next ASX 200 sector to boom?

Companies involved in Australia's agriculture industry might be preparing to receive record profits in the near future, with the sector's profits expected to surpass $70 billion for the first time.

The federal government's Australian Bureau of Agriculture and Resource Economics and Sciences (ABARES) has just updated its forecast for 2021/22, predicting the agriculture sector is in for a record-breaking year.

Australian farmers are having a fantastic year on the land. Particularly, as seasonal conditions and rainfall have turned out better than expected.

While Australia's agriculture sector is enjoying a bumper year, its international competitors are struggling. Much of the northern hemisphere saw below average rainfall and warmer weather over the 3 months ended 31 July.

ABARES expects the weather above the equator to have increased the prices of agricultural commodities to Australia's benefit.

In fact, the body expects the value of Australia's crop exports to increase by 17% to $30 billion in 2021/22. Further, ABARES believes the country's canola exports' value will increase by 50%.  

Additionally, the global recovery from COVID-19 has brought increased demand for travel and retail, which in turn will likely increase demand for fibres, oilseeds, and sugar.

The increasing demand and great year for Australian farmers might leave some market watchers wondering how to get a slice of the action.

Here are 3 ASX 200 shares that could be about to benefit from Australian agriculture's record-breaking year.

2 ASX 200 shares involved in the agriculture sector

GrainCorp Ltd (ASX: GNC)

Investors might want to keep an eye on GrainCorp in the near future.

The company operates the largest grain storage and handling network on Australia's eastern coast. GrainCorp also operates 7 bulk port terminals to help get Australian grain out to international markets.

It also produces canola oil and meal, and cattle and livestock feed.

ABARES has predicted that much of GrainCorp's business will see a boost in 2021/22.

Elders Ltd (ASX: ELD)

Elders' business model is splashed across most of Australia's agriculture sector. It has business in farm and rural insurance, property sales, market reporting, and commodity exchanges.

The company also sells a multitude of farming equipment and provides professional services to farmers.

It's relatively safe to say that what's good for the agriculture sector, is also good for Elders.

Motley Fool contributor Brooke Cooper has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. 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.

More on Consumer Staples & Discretionary Shares

Woman looks amazed and shocked as she looks at her laptop.
Consumer Staples & Discretionary Shares

This ASX 200 stock is sinking after its CEO quit amid 'inappropriate and offensive language' probe

The outgoing CEO doesn't recall making the alleged comment but has still decided to walk.

Read more »

Two happy shoppers looking at a smartphone together.
Consumer Staples & Discretionary Shares

Why this ASX fund manager can't stop buying Cettire shares

Cettire shares have been highly volatile in recent weeks, but this fund manager has been taking advantage...

Read more »

Man drawing an upward line on a bar graph symbolising a rising share price.
52-Week Highs

Metcash share price hits 52-week high on broker upgrade: Time to buy?

Brokers have responded positively to its trading update.

Read more »

a young man wearing an open necked shirt and a stylish coat raises a glass of champagne as he smiles.
Consumer Staples & Discretionary Shares

Treasury Wine share price races higher on Chinese tariffs news

China could be opening back up to this wine giant.

Read more »

Three excited business people cheer around a laptop in the office
Consumer Staples & Discretionary Shares

Guess which ASX 200 retail stock is tipped to deliver 19% upside and a 6.5% yield in 2024

Big returns could be on the cards for owners of this share according to Morgans.

Read more »

Smiling couple looking at a phone at a bargain opportunity.
Consumer Staples & Discretionary Shares

Metcash shares push higher on trading update

Investors have responded positively to this update.

Read more »

A woman sits at her computer with her hand to her mouth and a contemplative smile on her face as she reads about the performance of Allkem shares on her computer
Consumer Staples & Discretionary Shares

This ASX 300 company director just cashed out $16 million worth of shares

Should investors be worried when a CFO cashes out $16 million?

Read more »

A bored woman looking at her computer, it's bad news.
Consumer Staples & Discretionary Shares

Why is the Accent share price sinking 6% today?

This footwear retailer's shares are taking a hit on Wednesday. But why?

Read more »