The sector is expected to outperform most of the broader stock market and all sectors, outside of Health Care, on a risk adjusted basis during the next 12 months, the Commonwealth Bank says.

The September CBA agri index recorded positive growth for the agribusiness sector of 0.9 per cent during the past month.

Brendan White, executive general manager, CBA Regional and Agribusiness Banking said continued depth and resilience of the agribusiness sector, as well as strong performances from a number of the companies within the Agri Index, have contributed to the sector’s good heath.

“Two of the largest companies that make up the Agri Index, Incitec Pivot Limited and ABB Grain Limited, have performed exceptionally well and this is testament that the industry is healthy and on-form to recovery.”

Looking ahead, the consensus forecast return on investments continues to increase as brokers adjust their forecast dividend and earnings figures as they digest the outlook for the 2009-2010 financial year.

“For the year to September 2010, the forecast return for the sector is 17.7 per cent, up 5.4 percentage points since last month's report,” Mr White said.

“Although we have lowered our estimate of the current Australian wheat crop to 22.2 mega tonnes, the revisions to regional estimates, namely an upward revision to the West Australian crop and downward revision to the east coast crop, are ultimately more important than the headline figure," he said.

“In addition, favourable spring weather conditions are required to achieve yield potentials, and many regions are still delicately poised.

"Dryness and excessive heat over the next month would curb production estimates. The unfavourable near-medium term weather forecast puts downside risks on these production estimates.”