The agriculture sector is experiencing strong tailwinds that could drive its growth higher. Two key factors are supporting this momentum: the bottoming of the agriculture equipment cycle and rising prices of soft commodities like wheat, corn, soybeans, sugar, cotton, and coffee. These price increases are influenced by weather conditions, geopolitical conflicts, and inflation.
The sector is divided into five major segments: equipment suppliers, processors, fertilizers, soft commodities, and livestock. For investment purposes, most investors focus on agriculture equipment, processors, and fertilizer companies. Deere & Co (DE), a leading agriculture company in the U.S., has seen significant growth, with its stock up 42.2% year-to-date as of October 7, 2026, outperforming the S&P 500 by 14.0%. John May, Deere’s CEO, noted that 2026 marks the bottom of the current agriculture equipment cycle, indicating a rebound in equipment purchases by growers.
Soft commodity prices have risen due to increased demand for biofuels, restricted grain shipments from Russia and Ukraine, and weather-related events. Higher energy costs and inflation have also contributed to rising prices. Investors in soft commodities through futures or ETFs have benefited from these price increases. Companies processing grains and soybeans have also performed well, as many of their contracts are cost-plus arrangements.
Fertilizer companies like Nutrien have thrived in this environment of rising grain prices. Higher grain prices allow growers to invest more in fertilizers to maximize yield per acre. The iShares Global Agriculture Index ETF (COW) in Canada has also performed well, benefiting from the strong performance of agriculture equipment providers, fertilizer companies, and processors. The agriculture equipment cycle is a multi-year cycle, and if John May’s prediction is accurate, this could support the sector’s continued growth.