The May Commonwealth Bank Agri Indicators Report released today reveals the listed agribusiness sector delivered a return of 3.7 per cent in the month to May 15, compared to an almost flat result of 0.8 per cent for the broader S&P/ASX 200 accumulation index.

Commonwealth Bank Agribusiness executive general manager, Brendan White, says the continued depth and resilience of the agribusiness sector, as well as strong performances from a number of the companies within the Agribusiness Index, have contributed to the sector's strength during the past month.

"Despite continued market volatility, strong performances by ABB Grain Limited, Tassal Group Limited and GrainCorp Limited has resulted in a solid performance for the Agri Index over the past month," Mr White said.

"Obviously the takeover bid by Viterra for ABB Grain Limited has had a significant influence on the result however, this aside, it is still pleasing to see the improving trend and outlook for the sector."

Additional positive news for investors in the sector is that the Commonwealth's Agribusiness Index has returned nearly double that of the S&P/ASX 200 over the past three months.

"The Commonwealth Bank Agribusiness Index has returned 15.2 per cent during the past three months, a substantial return for agribusiness investors," Mr White said.

"This is significant if you consider the broader S&P/ASX 200 has returned just eight per cent."

Mr White said production prospects and price outlook for the Australian agriculture sector has also been buoyed over the past month.

The consensus forecast return is significantly higher than last month and is now sitting at eight per cent for the year to May 2010.

"However, investors should continue to be aware of the forecast volatility for the sector which remains elevated at just under 30 per cent for the next 12 months," Mr White said.

"On a risk adjusted basis the outlook for the sector is moderate – but significantly better than that for the broader market – and broadly in line with what’s expected for the Consumer Staples, Consumer Discretionary, IT and Industrials sectors."