5 Agriculture Stocks That Might Benefit From QE3

Ok so the news that the Fed is considering, and it may be a forgone conclusion that they will begin QE3 sometime this fall./winter  This a big deal for some agriculture stocks.  The main thrust of quantitative easing is that the Fed buys short term treasuries which in turn floods the monetary system with dollars. So in effect they inflate the money supply which, then trickles down to prices.  More money in the system equals higher prices for consumers.

One of the first things that a policy like this is going to affect are commodity prices, and with the drought here in the U.S.  things like cotton, wheat, corn, and other basic commodities the supply is already pretty low, and everyone in the world demands it, therefore prices have skyrocketed for those commodities..

The reason a QE3 will benefit Agribusiness stocks like Agrium or Monsanto is that their business is based on selling fertilizer and its associated products, and with farms struggling with the drought, they need products that will help facilitate more drought resistant crops and being able to yeild more per crop which agribusiness companies offer.

So if QE3 is unleashed commodity prices will rise by inflationary pressure alone and then with the under-supply of crops and growing world demand going into the fall the commodity prices should spike further.  The other thing that will happen is that if the weather returns to normal next year farmers will continue to demand the technology that helps get more crop yield, and this should help these agribusiness companies profit in the short term.

Agrium (AG)

Agrium's core business is a global producer and marketer of nutrients for agricultural and industrial markets and this business should continue to expand it sales growth this year has been 44% and the last 5 years earnings growth rate is 35%.



Potash (POT)

Potash Corporation  is involved in the mining of Potash a component of fertilizer.  The last 2 years has seen its earnings growth rate hovering around 80% and the sales growth rate this year is solid at 33%.



Monsanto (MON)

Along with its subsidiaries, is a provider of agricultural products for farmers. The Company's seeds, biotechnology trait products, and herbicides provide farmers with solutions that improve productivity, reduce the costs of farming, and produce better foods for consumers and better feed for animals. One of the weaker companies in this industry but it still manged and earnings growth rate of 49% last year and analyst estimates expect a 25% growth rate target for 2012.



Mosaic (MOS)

Mosaic is a producer and marketer of combined concentrated phosphate and potash crop nutrients for the global agriculture industry. It is a single source supplier of phosphate-and potash-based crops nutrients and animal feed ingredients.  The last 5 years have seen EPS growth rate at 48% compared ot only 3.20% for the S&P.



CF Industries (CF)


CF Industries s a manufacturer and distributor of nitrogen and phosphate fertilizer products worldwide.

Earnings per Share annual growth rate was 312% this year analyst expect it to come down to 18% but if QE3 is implememted this could have substantial effect on CF industries earnings and sales for 2013.