Winnipeg — A plunge in grain prices to start 2010 has pressured shares of some Canadian agricultural companies, but the pullback may be short-lived given the industry's strong long-term fundamentals. Analysts said the multi-year trend of improving diets in populous, developing countries like China and India remains intact, suggesting investors may find opportunities after recent price drops in the sector. “It becomes a great buying opportunity. This doesn't change our view on anything ... in the interim, there's going to be ups and downs,” said Robert Winslow, an analyst for Wellington West Capital Markets. The Toronto-based analyst thinks grain prices could still drift lower this year, taking agricultural equities with them. But underlying bullish fundamentals should result in higher grain prices - and better performance by those stocks - a year from now, he said. U.S. agriculture futures plunged in January, with Chicago corn down 14 per cent and wheat and soybeans falling 12 per cent as of Friday, mostly on projections for big supplies. That pressure has spilled onto markets for Canada's two biggest crops, spring wheat and canola, with ICE Canada canola futures down about 8 pe rcent. The performance of Canadian agriculture companies that do everything from handling grain to selling machinery is linked closely to the prices farmers collect for their crops. Saskatchewan-based Viterra Inc. , which became a global grain handling giant with last year's acquisition of Australia's ABB Grain, reported a small fourth-quarter loss on Jan. 21, with its stock off nearly 12 per cent from its recent high, partly because commodity prices have weakened. BMO Capital Markets analyst Kenneth Zaslow said in a note to clients that the year ahead looks to be challenging as Viterra deals with lower grain prices, absorbs ABB and handles a smaller Canadian crop. While demand in developing countries keeps the longer-term outlook bright, some farmers may not be able to ride out a lengthy grain price slide, said Brian Wittal, an agriculture analyst with Pro Com Marketing. A Reuters poll showed analysts expect big global grain production and a rebound in South American soybean output will keep pressure on Chicago corn, soybean and wheat futures through the end of 2010. Still, many agriculture-related equities are trading on the multi-year outlook, supported by the belief that as booming populations in the developing world prosper, they will eat more meat from grain-fed livestock. “(A lower grain price) doesn't mean the year is a complete writeoff by any means, but it definitely puts a negative slant on things,” said Jason Zandberg, an analyst with PI Financial Corp., who thinks grain prices will be flat if not higher by autumn. One of the companies Zandberg covers, auger and grain bin manufacturer Ag Growth International Inc. , should see most of its growth internationally, he said. Its shares and those of farm machinery dealer Cervus Equipment Corp. gained value in January, while the stock of machinery seller Rocky Mountain Dealerships Inc. slipped. Cervus and Rocky Mountain did well in 2009 as farmers tried to minimize their taxes by offsetting big crops with machinery purchases. But both Zandberg and Wittal noted sustained weakness in grain prices would hurt the sector. “Anyone that's trying to sell iron to farmers is certainly going to find it a lot tougher, just because, if guys were planning on having a little disposable income based on crop values, that's disappearing pretty fast,” Mr. Wittal said. Hemisphere GPS, a Calgary, Alberta-based maker of satellite technology used by farmers to precisely manage their land, is Mr. Winslow's top agriculture pick for 2010 for its long-term prospects. But Hemisphere's global positioning systems are a “luxury good” that wouldn't be among farmers' first purchases even after a good year, he notes, so it's not so much a short-term consideration. Investors looking for a near-term winner from weaker grain prices may want to consider pork processor Maple Leaf Foods although its shares slipped in January. Cheaper grain can weigh down hog prices since farmers may sell for less if their costs are lower, said analyst Robert Gibson of Octagon Capital Corp. If Maple Leaf can buy hogs more cheaply, its profit margins will grow, assuming retail pork prices don't fall as quickly, he said. The overall outlook for Maple Leaf looks “fantastic,” mainly because its last two years were so poor following a costly meat recall in 2008, Mr. Gibson said.