Food prices aren't falling anytime soon. Here are Credit Suisse's stock picks to cash in
Soaring food prices will put a dent in our pockets but could also provide investors with an opportunity to cash in, according to Credit Suisse , which named a raft of stocks that it thinks could benefit. Food prices around the world have reached record levels , according to the United Nations Food and Agriculture Organization. Food prices increased by nearly 34% over the past year, or 12.6% between February and March, according to data from the FAO Food Price Index, which measures the monthly change in international prices of a basket of food commodities. A surge in food prices in the U.S, which rose 8.8% in March from a year ago, also contributed to a record-high inflation print in the U.S. during that period. But Credit Suisse believes prices have yet to peak. "Food prices are usually higher for longer than we have seen so far. Food prices in real terms are still 20% below the previous peak. Food prices usually rise for 42 months (versus 20 months so far) and by 68% (versus 40%)," Credit Suisse's analysts, led by Andrew Garthwaite, said in a note on Tuesday. The bank attributed the current phenomenon to the disruption wrought by Russia's unprovoked invasion of Ukraine, higher energy costs, the impact of bad weather on harvests in top exporting countries, the increased use of agricultural land as carbon offset, and disruptions to China's planting season due to the ongoing surge in Covid-19 cases. The FAO has forecast food prices to rise by another 8-22%, Garthwaite noted. Stock beneficiaries Against this backdrop, Credit Suisse believes that companies that facilitate improvements in agricultural productivity, such as herbicides producers and agricultural equipment manufacturers, will benefit. Other beneficiaries that the bank identified include producers of fertilizer alternatives, palm oil producers, fish stock and other alternative protein producers, as well as stocks with exposure to agricultural land. The bank's top picks within these themes are chemicals firm Croda International and BASF , Dutch nitrogen and methanol products manufacturer OCI, Australian salmon farmer Tassal Group , Brazilian meat processor JBS and frozen foods firm Nomad Foods . Read more March's runaway energy prices and higher food costs could mean hottest consumer inflation since 1981 A fertilizer shortage, worsened by war in Ukraine, is driving up global food prices and scarcity Chicago-based commodities trading firm Archer-Daniels-Midland , plantations firms Sime Darby Plantation and Genting Plantations also make the list, alongside two agricultural machinery manufacturer Deere & Co , and AGCO . Sime Darby Plantation and OCI also turned up on the bank's screen for cheap stocks with positive earnings revisions. All are rated outperform by Credit Suisse.

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