From the AGE...

From the AGE

http://www.theage.com.au/business/storms-bring-best-sowing-in-years-20100323-qu7n.html


Storms bring best sowing in years
RICHARD WILLINGHAM
March 24, 2010

THE deluge across eastern Australia may have caused damage to infrastructure and homes but it could give a big boost to agriculture.

The heavy rain and storms that have hit the east coast have resulted in the best start to a season in 25 years, according to RBS Morgans analyst Belinda Moore.

''The floods in some cases have filled storage levels and dams, which provides a bit of certainty, but further follow-up rains will be required,'' she said.

''WA has also had pretty good rains over the last couple of days, which is good too because that is the number-one wheat-growing state.

''All the farm input companies are seeing strong sales since January. It could be a very solid year for agriculture companies after a particularly tough 2009.''

James Ferrier, an analyst with Wilson HTM Investment Group, said the rain had provided a full moisture profile in the soil, good news for the winter cropping season.

"Theoretically, the improved seasonal conditions should provide better confidence in the agriculture industry and therefore increase earnings that the ag-services companies derive from the sector,'' he said.

But the major companies servicing the agriculture sector, Elders, AWB and GrainCorp, all had other factors at play that were affecting their share prices, Mr Ferrier said.

''Elders has had a major recapitalisation, AWB had a downgrade last week in relation to its grain marketing book and GrainCorp is still bedding down a major acquisition, so it doesn't necessarily mean that this improved seasonal outlook is going to translate into higher share prices for those stocks in the near term,'' he said.

The Australian Bureau of Agricultural and Resource Economics has predicted a significant growth in farm export earnings over the next five years.

Its report, released earlier this month, forecasts that agricultural export earnings will total $29 billion in 2009-10 and 2010-11 and grow to $32.2 billion in 2014-15.

Rainfall has also been heavy enough in New South Wales for the Department of Primary Industries to downgrade the amount of land still in the drought's grip.

The NSW DPI said 39.8 per cent of NSW was now drought-affected, down 25 percentage points on February and the lowest it has been in four years.

Elders shares dropped 7.09 per cent - making it the worst performing stock on the S&P/ASX 200 Index yesterday, to close at $1.37. GrainCorp closed unchanged at $6.20, Incitec Pivot was up 2.7 per cent to $3.46 and AWB was down 1.06 per cent at 93.