Wheat Stocks to Buy As Russia-Ukraine Supply Chains Falter
Together, Russia and Ukraine are the world’s largest wheat exporters. With many ports closed, global demand will surge — and wheat stock buyers may get the windfall.
March 4 2022, Published 11:37 a.m. ET
Together, Ukraine and Russia contribute a third of the world’s wheat exports, which makes them the biggest wheat exporters in the world. As Russia continues to invade Ukraine — even seizing Europe’s biggest nuclear power plant in Zaporizhzhya — ports in Ukraine remain totally closed. Meanwhile, EU nations have threatened to ban Russian ships, which adds increased pressure on wheat supply chains. Is it a good time to buy wheat stocks?
Investors can look to wheat stocks, including those in other parts of Europe, to capitalize on shifting global demand. These companies are solid targets for wheat stock opportunities.
American company Mosaic (MOS) is a bet on wheat nutrition.
Mosaic Company (MOS) produces and markets concentrated phosphate and potash crop nutrients. In 2020, Mosaic partnered with agriculture tech company BioConsortia, Inc. to develop and launch nitrogen-fixing technology to increase wheat yields. Mosaic is focusing on wheat grown in the Americas.
Experts give MOS stock a 45 percent "buy" rating due to its average annual return of 11.3 percent and YTD return of 32 percent.
Archer-Daniels-Midland Co. a solid wheat production bet.
Archer-Daniels-Midland Co. (ADM) is an American multinational food company that produces wheat. In recent trading days, ADM has outperformed competitors like Tyson Foods (TSN) and Bunge Ltd. (BG).
ADM jumped 5.63 percent in the week ending March 4, adding to a YTD rally to the tune of 20.74 percent (an even stronger feat considering the broad market’s bear run so far this year).
George Weston Limited is an Australian company serving global wheat demands.
George Weston Limited (WN) is an Australian wheat company that trades on the Toronto Stock Exchange. The company is one of the largest food manufacturers in Australia and New Zealand. WN stock is up marginally so far this year, but its trailing 12-month returns are much more impressive at 46.11 percent.
WN stock has jumped 7.72 percent since Feb. 23, which shows momentum for the wheat stock. Since George Weston’s parent company is Associated British Foods (ASBFY), investors can pick either stock — but WN will have a higher wheat production concentration for more honed strategies.
Should you buy wheat stocks while the supply chain is strained?
One of the natural byproducts of the Russian invasion of Ukraine is that Russia is isolated from the global economy. Not only does this mean Russia can't access many international commodities, but it also means the rest of the world can't access Russian or Ukrainian commodities.
Commodities like wheat, sunflower oil, and petroleum have been hit especially hard. Buying wheat stocks for companies that produce and distribute outside of the impacted region is a buying opportunity. As of Wednesday, March 2, wheat costs $10.59 per bushel, which is the most expensive rate since 2008.
As Russia closes in on the end of its second week of invading Ukraine, these prices will likely keep rising. European grain futures prices are up for milling and feed wheat over the course of March–July 2022.