Improved prospects lift key agribusiness stocks

Shares in AWB rose 26.5, or 29.3 per cent, to close at $1.17, reaching a high of $1.22 early in the afternoon. More than 6.7million shares valued at $7.5million were traded.

Similarly, ABB's shares rose 64, or 12.2 per cent, to close at $5.88, with the value of shares traded at $3.6 million.

But both companies' share prices are well off their respective 12-month highs of $3.92 and $11.18.

Shares in AWB hit a record low last month after the company warned that its headline profit for the first half would halve and its dividend payment would shrink as the drought took its toll.

ABN Amro analyst Belinda Moore said the agribusiness stocks had all been oversold in recent weeks as the general market declined.

Some promising rain had helped re-evaluate a few of the stocks.

Ms Moore said several companies, including AWB and Futuris, were presenting at an Austock conference in Sydney today and could make some announcements, prompting market activity. Some investors might be just short-covering, she said.

Austock analyst Paul Jensz agreed there was "quite a bit" of short-selling going on because there was a lack of trading stock due to the ban on short-selling of financial companies.

Mr Jensz said there was more good news than bad in the agribusiness sector. "There is a reasonable likelihood of a good planting season," he said.

Speculation about consolidation in the agribusiness sector rose again last week when Swiss trader Glencore International bought 5.93 per cent of GrainCorp, making it the third-biggest shareholder in the grain trading company.

GrainCorp shares closed up 1 at $5.71 yesterday.