Grain-focussed companies have been through a week of extreme volatility, but the factors that saw the Australian sharemarket dip below 5000 points last week were not the same as those influencing the values of the major ASX-listed grain businesses, according to one analyst.
Grant Saligari, senior equities analyst with CommSec said news directly surrounding the grain businesses, such as the news the Iraq government has lodged a lawsuit against AWB and the seasonal outlook for crops, were bigger drivers than the oil price hike which has had a big bearing on the wider ASX.
"I don't know that the price of oil is really having a huge influence on grain-focused agribusiness stocks," Mr Saligari said.
"There is some flow-on effect in that grain prices will be boosted by the underlying demand for grain for bio-fuel, which becomes more competitive with high oil prices, but these are businesses more concerned with grain volume.
"AWB being made part of this Iraqi litigation and the good rain that fell over southern NSW and Victoria this week is far more likely to have an influence than other broader issues."
It has been a turbulent week for the three major ASX listed grains companies.
AWB shares fell 8.13pc to $2.26 on the back of the Iraqi news before rebounding 7.5pc to 2.43 on Tuesday.
ABB's share price came back from $8.69 to $8 this week, while GrainCorp has fell from $8.23 to $7.50, or 9.2pc.
On the other hand, Elders Futuris has risen a whopping 21pc to $1.25, primarily attributed to the news of changes to the company, including the resignation of CEO Les Wozniczka.
Mr Saligari said that the deregulation of the bulk wheat export market was also providing food for thought for the investment community.
"There's the potential for earnings to be won and lost there – we've seen the market largely factoring in AWB losing the single desk in the past 12 months, but now we are seeing a guessing game arising over how much extra business it will generate for competitors such as ABB and GrainCorp," he said.
"What people are keeping in mind is that there is likely to be a range of competitors entering the market, including some of the big multi-nationals and while the strong supply chains of ABB and GrainCorp should assist, there will have to be a look at the size of their balance sheets relative to some of the international traders, who could capture a big share of the cash market."
Email a friend