By Evie Liu
Agricultural investing today is influenced by a broad set of factors beyond weather. Biofuel policy shifts, volatile energy markets, and trade tensions with China are shaping demand for crops such as corn and soybeans while also affecting farmers' production costs and profit margins. Those factors can directly influence spending decisions on seeds, fertilizers, crop chemicals, machinery, and technology.
The U.S. war in Iran, for example, has disrupted global fertilizer markets by threatening supplies of key inputs, driving up nitrogen and phosphate prices. That can benefit some fertilizer producers while squeezing margins for others that rely heavily on imported feedstocks. Seed and crop-protection companies are more influenced by advances in biotechnology and regulatory policy, while farm machinery makers are exposed to swings in farm income and financing costs.
Kristen Owen is a managing director and equity analyst at Oppenheimer covering a broad set of agriculture-related companies. Barron's spoke with Owen on May 13 about the pressures facing farmers; how policy, geopolitics, and innovation are reshaping the industry; and why some agriculture stocks -- such as seed company Corteva, machinery maker CNH Industrial, and farm-technology provider Trimble -- still have upside despite a difficult backdrop. An edited version of the conversation follows.
Barron's: What macro factors are affecting farm income and agriculture companies today?
Kristen Owen: Fertilizer prices have moved up somewhere between 40% and 60% since the outbreak of the Iran conflict. That is going to have a direct impact on farmer decisions.
We aren't seeing the impact so much in North America this spring planting season, since the purchase of fertilizer was done largely at the end of 2025. But we are going to see that manifest in the Southern Hemisphere this fall. It's expected that Brazilian and Argentine farmers may pull back how much fertilizer they use on crops, which can have a negative impact on yield.
Weather could also be a key risk this year because of the El Niño climate expected this summer, when warming in the Pacific Ocean is expected to cause worldwide weather disruptions. That could lead to significant yield deterioration in the Southern Hemisphere, which could drive crop prices higher -- something that will be actually beneficial for farmers in the Northern Hemisphere in 2027.
Still, it's important to remember that many U.S. companies serve the Brazilian agriculture market, as well. That means weakness in Brazil's farm sector would be negative for their sales and stocks.
How would elevated fertilizer costs influence farmers' purchasing decisions?
Within the fertilizer space, we anticipate the highest demand deferral for phosphorus, because it's the most expensive and elastic nutrient. We are cautious about Mosaic, which has a higher exposure to phosphorus. Nutrien has announced a strategic review of its phosphate business. A sale or monetization of that asset could allow some reinvestment in its potash business.
The elevated costs of fertilizer will eat into farmers' purchasing power in the back half of this year. While machinery might see a bigger impact, we expect seeds to be the most resilient and crop protection relatively insulated, since farmers will still try to invest to protect their yield where they can.
Corteva, which sells both seeds and crop-protection chemicals, is one of our top picks for the year. We rate Corteva Outperform, with an $89 price target versus its current price of $79. We are looking for sales growth of 4.5% in 2026 and earnings growth of 9%. Shares are currently trading at 20 times next 12-month earnings.
Corteva plans to split its seed and crop-protection business in the second half of 2026. What does that mean for investors?
Both companies will be publicly traded after the split. New Corteva will be the crop-protection business, and the seed company has recently been named Vylor. The pending split could provide a value unlock since the two businesses -- while serving the same customer -- are priced very differently now.
The seed business warrants a significantly higher multiple because demand is relatively inelastic. Crop protection, on the other hand, faces challenges posed by precision technology and a more stringent regulatory framework. Crop protection is also more cyclical. While the highs may be higher in good years, the lows are also lower, and we are at a low point today.
What's your outlook for machinery demand?
Besides higher fertilizer prices, elevated financing costs have also been prohibitive for farmers when it comes to machine purchasing. Brazil, in particular, is facing weak farm economics, very high interest rates, and a liquidity squeeze that has left many farmers short on cash.
Still, despite weakness on the agricultural side, machinery companies have the potential to grow in 2026 on the back of strength in their construction business.
We are seeing generational investments in infrastructure as a function of energy security, national defense, and artificial-intelligence buzz. We are seeing that flow through in strong order books for companies like Caterpillar and Deere.
The reinstatement of accelerated depreciation in the One Big Beautiful Bill Act last year could also support equipment demand by allowing farmers to deduct machinery purchases more quickly -- instead of spreading them over many years of depreciation -- to cut tax burdens.
Caterpillar stock has surged 160% over the past year and now trades for 34 times forward earnings. Which machinery names still look attractive to you?
CNH has the same tailwinds, but its multiple -- at 20 times next 12-month earnings -- is nowhere near as stretched. The company said 2026 is expected to be a difficult year especially due to weakness in the Brazilian market. But the new management team is implementing operational changes to improve profitability. We expect earnings per share to come at 37 cents in fiscal 2026, but jump to 74 cents in 2027. We have a Buy rating for the stock with a target price of $16 compared with the current level of $10.
How would additional government support, potential interest-rate cuts, and a trade deal with China influence farm income?
We have a farm bill on the table, and there is the potential for incremental government support that comes as a rider. If there is another round of government support, that money usually goes to shoring up the balance sheet and crop input -- benefiting companies like Corteva and Nutrien -- instead of machinery purchase.
We have seen that in 2019 with the bailout packages in the Phase One trade agreement with China. First-year purchases were toward crop inputs, and it took two years before farmers were willing to underwrite a large expense and invest in machinery again.
When it comes to China's purchasing commitment, more demand and certainty is always better for farmers. A rate cut would also be positive, particularly for machinery companies like Deere, AGCO, and CNH. But we think domestic policies that support incremental demand actually have a greater impact on the sector.
What policies are you watching that could drive agricultural demand?
Oil refineries have to blend in a certain percentage of bio-based diesel. In the 2026-27 Renewable Fuel Standard passed in March, the biodiesel volume requirement was raised 60% higher than 2025 levels. That's a durable source of demand for U.S. crops, especially soybeans, that are the major feedstock for biodiesel production. The U.S. Department of Agriculture expects a 4.5% increase in crushing volume in the 2026-27 crop year. This is going to keep a floor on soybean demand and help support commodities prices.
We have the E15 bill that would allow year-round sales of gasoline with 15% ethanol blend. [Gasoline with 10% ethanol blend is standard across most U.S. gas stations today. Ethanol in the U.S. is mostly made from corn, so a 15% blend would drive demand for corn higher. The House passed the E15 bill on May 13; it has now moved to the Senate.]
But there has been a lot of pushback from the energy industry since ethanol is seen as making things more expensive for them. Even if the legislation passes, I don't think it will move the needle because we don't necessarily have the infrastructure to meet the incremental demand: There are only 4,500 gas stations nationwide that are compatible with E15 fuel. [The U.S. has roughly 150,000 gas stations nationwide.]
We are also keeping an eye on the United States-Mexico-Canada Agreement negotiations this year. Mexico is one of the largest importers of American corn, and Canada is one of the largest importers of U.S. ethanol.
Investors are paying closer attention to how technology is reshaping agriculture. What innovation are we seeing in the seed and crop-protection business?
Seed is going through a structural change as a result of evolving technology. We see new tools like gene editing to create a new set of potential outcomes. There is a long development cycle here and a really significant contributor to earnings growth over the next decade.
Historically, the seed industry has focused on herbicide and pesticide tolerances. But there are more possibilities with genetic coding. For example, the value of soybean oil has increased dramatically. If I can genetically alter an existing plant to produce more oil, farmers will get paid more.
We are also seeing more traits in climate resiliency, such as drought tolerance in wheat and short-stature corn that is less susceptible to strong winds.
On the protection side, precision technologies are reducing the amount of herbicide farmers need to use. Crop-protection companies need to think about how to create active ingredients that work with a smaller dosage and allow them to charge more.
What are the technology developments on the machinery side?
We are seeing strong demand for technology that enhances labor productivity. Labor challenges in the farm sector are particularly acute. You've got an aging workforce, and the size of the skilled workforce is getting smaller due to our immigration policies.
Trimble provides technology to machinery companies like Caterpillar. The technology uses geospatial connections to manage how the machine moves in space, so somebody like me can get in the cab of an excavator and operate the machinery safely. That's a huge value unlock for contractors that have multiple years of backlogs.
The stock has been quite beaten up lately because it's getting lumped in with other software companies. Yet fundamentals have improved. We expect Trimble to grow revenue by 8%, to $3.9 billion, in fiscal 2026 and earnings to grow 14%, to $3.58 per share. The stock is trading at 15 times next 12-month earnings, the lowest level since the height of the pandemic. The selloff is unjustified.
Thanks, Kristen.
Write to Evie Liu at evie.liu@barrons.com
This content was created by Barron's, which is operated by Dow Jones & Co. Barron's is published independently from Dow Jones Newswires and The Wall Street Journal.
(END) Dow Jones Newswires
By Evie Liu
Agricultural investing today is influenced by a broad set of factors beyond weather. Biofuel policy shifts, volatile energy markets, and trade tensions with China are shaping demand for crops such as corn and soybeans while also affecting farmers' production costs and profit margins. Those factors can directly influence spending decisions on seeds, fertilizers, crop chemicals, machinery, and technology.
The U.S. war in Iran, for example, has disrupted global fertilizer markets by threatening supplies of key inputs, driving up nitrogen and phosphate prices. That can benefit some fertilizer producers while squeezing margins for others that rely heavily on imported feedstocks. Seed and crop-protection companies are more influenced by advances in biotechnology and regulatory policy, while farm machinery makers are exposed to swings in farm income and financing costs.
Kristen Owen is a managing director and equity analyst at Oppenheimer covering a broad set of agriculture-related companies. Barron's spoke with Owen on May 13 about the pressures facing farmers; how policy, geopolitics, and innovation are reshaping the industry; and why some agriculture stocks -- such as seed company Corteva, machinery maker CNH Industrial, and farm-technology provider Trimble -- still have upside despite a difficult backdrop. An edited version of the conversation follows.
Barron's: What macro factors are affecting farm income and agriculture companies today?
Kristen Owen: Fertilizer prices have moved up somewhere between 40% and 60% since the outbreak of the Iran conflict. That is going to have a direct impact on farmer decisions.
We aren't seeing the impact so much in North America this spring planting season, since the purchase of fertilizer was done largely at the end of 2025. But we are going to see that manifest in the Southern Hemisphere this fall. It's expected that Brazilian and Argentine farmers may pull back how much fertilizer they use on crops, which can have a negative impact on yield.
Weather could also be a key risk this year because of the El Niño climate expected this summer, when warming in the Pacific Ocean is expected to cause worldwide weather disruptions. That could lead to significant yield deterioration in the Southern Hemisphere, which could drive crop prices higher -- something that will be actually beneficial for farmers in the Northern Hemisphere in 2027.
Still, it's important to remember that many U.S. companies serve the Brazilian agriculture market, as well. That means weakness in Brazil's farm sector would be negative for their sales and stocks.
How would elevated fertilizer costs influence farmers' purchasing decisions?
Within the fertilizer space, we anticipate the highest demand deferral for phosphorus, because it's the most expensive and elastic nutrient. We are cautious about Mosaic, which has a higher exposure to phosphorus. Nutrien has announced a strategic review of its phosphate business. A sale or monetization of that asset could allow some reinvestment in its potash business.
The elevated costs of fertilizer will eat into farmers' purchasing power in the back half of this year. While machinery might see a bigger impact, we expect seeds to be the most resilient and crop protection relatively insulated, since farmers will still try to invest to protect their yield where they can.
Corteva, which sells both seeds and crop-protection chemicals, is one of our top picks for the year. We rate Corteva Outperform, with an $89 price target versus its current price of $79. We are looking for sales growth of 4.5% in 2026 and earnings growth of 9%. Shares are currently trading at 20 times next 12-month earnings.
Corteva plans to split its seed and crop-protection business in the second half of 2026. What does that mean for investors?
Both companies will be publicly traded after the split. New Corteva will be the crop-protection business, and the seed company has recently been named Vylor. The pending split could provide a value unlock since the two businesses -- while serving the same customer -- are priced very differently now.
The seed business warrants a significantly higher multiple because demand is relatively inelastic. Crop protection, on the other hand, faces challenges posed by precision technology and a more stringent regulatory framework. Crop protection is also more cyclical. While the highs may be higher in good years, the lows are also lower, and we are at a low point today.
What's your outlook for machinery demand?
Besides higher fertilizer prices, elevated financing costs have also been prohibitive for farmers when it comes to machine purchasing. Brazil, in particular, is facing weak farm economics, very high interest rates, and a liquidity squeeze that has left many farmers short on cash.
Still, despite weakness on the agricultural side, machinery companies have the potential to grow in 2026 on the back of strength in their construction business.
We are seeing generational investments in infrastructure as a function of energy security, national defense, and artificial-intelligence buzz. We are seeing that flow through in strong order books for companies like Caterpillar and Deere.
The reinstatement of accelerated depreciation in the One Big Beautiful Bill Act last year could also support equipment demand by allowing farmers to deduct machinery purchases more quickly -- instead of spreading them over many years of depreciation -- to cut tax burdens.
Caterpillar stock has surged 160% over the past year and now trades for 34 times forward earnings. Which machinery names still look attractive to you?
CNH has the same tailwinds, but its multiple -- at 20 times next 12-month earnings -- is nowhere near as stretched. The company said 2026 is expected to be a difficult year especially due to weakness in the Brazilian market. But the new management team is implementing operational changes to improve profitability. We expect earnings per share to come at 37 cents in fiscal 2026, but jump to 74 cents in 2027. We have a Buy rating for the stock with a target price of $16 compared with the current level of $10.
How would additional government support, potential interest-rate cuts, and a trade deal with China influence farm income?
We have a farm bill on the table, and there is the potential for incremental government support that comes as a rider. If there is another round of government support, that money usually goes to shoring up the balance sheet and crop input -- benefiting companies like Corteva and Nutrien -- instead of machinery purchase.
We have seen that in 2019 with the bailout packages in the Phase One trade agreement with China. First-year purchases were toward crop inputs, and it took two years before farmers were willing to underwrite a large expense and invest in machinery again.
When it comes to China's purchasing commitment, more demand and certainty is always better for farmers. A rate cut would also be positive, particularly for machinery companies like Deere, AGCO, and CNH. But we think domestic policies that support incremental demand actually have a greater impact on the sector.
What policies are you watching that could drive agricultural demand?
Oil refineries have to blend in a certain percentage of bio-based diesel. In the 2026-27 Renewable Fuel Standard passed in March, the biodiesel volume requirement was raised 60% higher than 2025 levels. That's a durable source of demand for U.S. crops, especially soybeans, that are the major feedstock for biodiesel production. The U.S. Department of Agriculture expects a 4.5% increase in crushing volume in the 2026-27 crop year. This is going to keep a floor on soybean demand and help support commodities prices.
We have the E15 bill that would allow year-round sales of gasoline with 15% ethanol blend. [Gasoline with 10% ethanol blend is standard across most U.S. gas stations today. Ethanol in the U.S. is mostly made from corn, so a 15% blend would drive demand for corn higher. The House passed the E15 bill on May 13; it has now moved to the Senate.]
But there has been a lot of pushback from the energy industry since ethanol is seen as making things more expensive for them. Even if the legislation passes, I don't think it will move the needle because we don't necessarily have the infrastructure to meet the incremental demand: There are only 4,500 gas stations nationwide that are compatible with E15 fuel. [The U.S. has roughly 150,000 gas stations nationwide.]
We are also keeping an eye on the United States-Mexico-Canada Agreement negotiations this year. Mexico is one of the largest importers of American corn, and Canada is one of the largest importers of U.S. ethanol.
Investors are paying closer attention to how technology is reshaping agriculture. What innovation are we seeing in the seed and crop-protection business?
Seed is going through a structural change as a result of evolving technology. We see new tools like gene editing to create a new set of potential outcomes. There is a long development cycle here and a really significant contributor to earnings growth over the next decade.
Historically, the seed industry has focused on herbicide and pesticide tolerances. But there are more possibilities with genetic coding. For example, the value of soybean oil has increased dramatically. If I can genetically alter an existing plant to produce more oil, farmers will get paid more.
We are also seeing more traits in climate resiliency, such as drought tolerance in wheat and short-stature corn that is less susceptible to strong winds.
On the protection side, precision technologies are reducing the amount of herbicide farmers need to use. Crop-protection companies need to think about how to create active ingredients that work with a smaller dosage and allow them to charge more.
What are the technology developments on the machinery side?
We are seeing strong demand for technology that enhances labor productivity. Labor challenges in the farm sector are particularly acute. You've got an aging workforce, and the size of the skilled workforce is getting smaller due to our immigration policies.
Trimble provides technology to machinery companies like Caterpillar. The technology uses geospatial connections to manage how the machine moves in space, so somebody like me can get in the cab of an excavator and operate the machinery safely. That's a huge value unlock for contractors that have multiple years of backlogs.
The stock has been quite beaten up lately because it's getting lumped in with other software companies. Yet fundamentals have improved. We expect Trimble to grow revenue by 8%, to $3.9 billion, in fiscal 2026 and earnings to grow 14%, to $3.58 per share. The stock is trading at 15 times next 12-month earnings, the lowest level since the height of the pandemic. The selloff is unjustified.
Thanks, Kristen.
Write to Evie Liu at evie.liu@barrons.com
This content was created by Barron's, which is operated by Dow Jones & Co. Barron's is published independently from Dow Jones Newswires and The Wall Street Journal.
(END) Dow Jones Newswires
May 29, 2026 16:32 ET (20:32 GMT)
Copyright (c) 2026 Dow Jones & Company, Inc.
Comments