By Alex Sirois
Investor Place
A recent Wall Street Journal article highlighted the fact that incomes for U.S. farmers, which have been subdued for years, are quickly rising. Take note, investors who are interested in agricultural stocks. Rising prices for agricultural commodities — including soybeans, corn, and other grains — is putting more dollars into the pockets of farmers across the U.S. heartland.
Those farmers, in turn, are investing those surplus dollars into a few primary farm assets: Dirt and iron. In other words, farmers are buying up cropland and machinery in order to expand and improve their respective businesses. The surge in demand for agricultural commodities is, of course, rippling across the sector.
The value of U.S. cropland hit record highs this year according to federal data. And prices for new and used farm equipment are soaring as well.
The sharp rise in demand was partially driven by strong demand from China for soybeans and corn. And U.S. agricultural exports are expected to reach their highest levels ever in fiscal years 2021 and 2022.
In fact, the United States Department of Agriculture (USDA) is projecting that net farm income will hit $113 billion in 2021, the highest levels since 2013.
Increased spending for dirt and iron will serve to increase the prospects of agricultural stocks focused on real estate and farm equipment in particular. Let’s look at those which stand to improve most.