If Goldman Sachs's sell recommendation on commodities this week raised one caution over buying into Glencore's flotation, a study into agricultural shares has added another.

As Glencore was drawing up the final details of Thursday's launch of its stockmarket flotation process, University of Illinois academics unveiled a report implying that shares in the Swiss-based commodities giant might only be a modest bet – from the perspective of its agriculture division, at least.

Most US farm-sector shares have, since the farm commodities boom first got into its swing four years ago, offered healthy gains for investors, rising by an average of some 50%.

"Like crop farms, many agricultural firms have performed well in a period of higher commodity prices," a study by Clay Kramer and Gary Schnitkey, at the university's agriculture faculty, said.

Sector laggard

But such gains have not been enjoyed by some of the better known traders and crushers, such as Archer Daniels Midland and Bunge, which saw their share prices fall by 4% in the four years to the end of 2010.

This so-called "first processor" sector, comparable with Glencore's agriculture division, "had the lowest market value increase".

"This is interesting. After all, both Bunge and Archer Daniels are pretty well managed," Professor Schnitkey told Agrimoney.com.

"What it may be down to is the fact that they are buying inputs from farms that went up in cost."

The rising cost of farm commodities kept processing margins under pressure, a factor not suffered to such a degree by sectors such as equipment companies and fertilizer makers.

Top of the heap

Indeed, fertilizer groups had seen their value more than triple, spurred by a merger wave, which has swallowed the likes of Terra Industries, Potash One and, nearly, PotashCorp, besides the ability to ramp up prices faster than input costs.

However, the first processor sector may not for ever stay at the bottom of the pile, Professor Schnitkey said, noting that a more inflationary environment will allow them more easily pass through rises in raw material costs.

"I fully expect the these firms will begin to do better going forward," he said.

And as for prospects for Glencore itself, he stopped at saying: "That's a good question."