Best of the Week
Most Popular
1. US Housing Market Real Estate Crash The Next Shoe To Drop – Part II - Chris_Vermeulen
2.The Coronavirus Greatest Economic Depression in History? - Nadeem_Walayat
3.US Real Estate Housing Market Crash Is The Next Shoe To Drop - Chris_Vermeulen
4.Coronavirus Stock Market Trend Implications and AI Mega-trend Stocks Buying Levels - Nadeem_Walayat
5. Are Coronavirus Death Statistics Exaggerated? Worse than Seasonal Flu or Not?- Nadeem_Walayat
6.Coronavirus Stock Market Trend Implications, Global Recession and AI Stocks Buying Levels - Nadeem_Walayat
7.US Fourth Turning Accelerating Towards Debt Climax - James_Quinn
8.Dow Stock Market Trend Analysis and Forecast - Nadeem_Walayat
9.Britain's FAKE Coronavirus Death Statistics Exposed - Nadeem_Walayat
10.Commodity Markets Crash Catastrophe Charts - Rambus_Chartology
Last 7 days
Johnson & Johnson (JNJ) Big Pharma Stock for Machine Learning Life Extension Investing - 2nd Jul 20
All Eyes on Markets to Get a Refreshed Outlook - 2nd Jul 20
The Darkening Clouds on the Stock Market S&P 500 Horizon - 2nd Jul 20
US Fourth Turning Reaches Boiling Point as America Bends its Knee - 2nd Jul 20
After 2nd Quarter Economic Carnage, the Quest for Philippine Recovery - 2nd Jul 20
Gold Completes Another Washout Rotation – Here We Go - 2nd Jul 20
Roosevelt 2.0 and ‘here, hold my beer' - 2nd Jul 20
U.S. Dollar: When Almost Everyone Is Bearish... - 1st Jul 20
Politicians Prepare New Money Drops as US Dollar Weakens - 1st Jul 20
Gold Stocks Still Undervalued - 1st Jul 20
High Premiums in Physical Gold Market: Scam or Supply Crisis? - 1st Jul 20
US Stock Markets Enter Parabolic Price Move - 1st Jul 20
In The Year 2025 If Fiat Currency Can Survive - 30th Jun 20
Gold Likes the IMF Predicting a Deeper Recession - 30th Jun 20
Silver Is Still Cheap For Now - 30th Jun 20
More Stock Market Selling Ahead - 30th Jun 20
Trending Ecommerce Sites in 2020 - 30th Jun 20
Stock Market S&P 500 Approaching the Precipice - 29th Jun 20
APPLE Tech Stock for Investing to Profit from the Machine Learning Mega trend - 29th Jun 20
Student / Gamer Custom System Build June 2020 Proving Impossible - Overclockers UK - 29th Jun 20
US Dollar with Ney and Gann Angles - 29th Jun 20
Europe's Banking Sector: When (and Why) the Rout Really Began - 29th Jun 20
Will People Accept Rampant Inflation? Hell, No! - 29th Jun 20
Gold & Silver Begin The Move To New All-Time Highs - 29th Jun 20
US Stock Market Enters Parabolic Price Move – Be Prepared - 29th Jun 20
Meet BlackRock, the New Great Vampire Squid - 28th Jun 20
Stock Market S&P 500 Approaching a Defining Moment - 28th Jun 20
U.S. Long Bond: Let's Review the "Upward Point of Exhaustion" - 27th Jun 20
Gold, Copper and Silver are Must-own Metals - 27th Jun 20
Why People Have Always Held Gold - 27th Jun 20
Crude Oil Price Meets Key Resistance - 27th Jun 20
INTEL x86 Chip Giant Stock Targets Artificial Intelligence and Quantum Computing for 2020's Growth - 25th Jun 20
Gold’s Long-term Turning Point is Here - 25th Jun 20
Hainan’s ASEAN Future and Dark Clouds Over Hong Kong - 25th Jun 20
Silver Price Trend Analysis - 24th Jun 20
A Stealth Stocks Double Dip or Bear Market Has Started - 24th Jun 20
Trillion-dollar US infrastructure plan will draw in plenty of metal - 24th Jun 20
WARNING: The U.S. Banking System ISN’T as Strong as Advertised - 24th Jun 20
All That Glitters When the World Jitters is Probably Gold - 24th Jun 20
Making Sense of Crude Oil Price Narrow Trading Range - 23rd Jun 20
Elon Musk Mocks Nikola Motors as “Dumb.” Is He Right? - 23rd Jun 20
MICROSOFT Transforming from PC Software to Cloud Services AI, Deep Learning Giant - 23rd Jun 20
Stock Market Decline Resumes - 22nd Jun 20
Excellent Silver Seasonal Buying Opportunity Lies Directly Ahead - 22nd Jun 20
Where is the US Dollar trend headed ? - 22nd Jun 20
Most Shoppers have Stopped Following Supermarket Arrows, is Coughing the New Racism? - 22nd Jun 20

Market Oracle FREE Newsletter

AI Stocks 2020-2035 15 Year Trend Forecast

A Breakfast Buffet of Profits From Agricultural Commodities

Commodities / Agricultural Commodities Oct 24, 2007 - 11:34 AM GMT

By: Money_and_Markets

Commodities

Best Financial Markets Analysis ArticleSean Brodrick writes : When I was learning this business, I sometimes used to have breakfast with an old trader. During a big selloff, he would always remind me that great stocks get dumped along with the stocks that deserve it.

My old mentor has since gone up to the great trading floor in the sky. Meanwhile, I've noticed breakfast has gotten a lot more expensive over the last few years.


And that's why I suggest using the market's recent pullback to scoop up beaten-down bargains in the agricultural sector. More on what companies to target in a moment. First, let's talk about the fact that …

Prices Are Sizzling Like Bacon In a Hot Cast-Iron Pan!

I've been telling you about the massive forces lining up to drive agriculture prices higher. And by all measures, those forces keep getting more intense. The proof is in your grocer's cereal aisle … your local coffee shop's drink list … and breakfast menus all across the country:

Just about every item on your breakfast table is rising in price!

#1. The price of orange juice is up 19% in 12 months. It's only going to get worse, as the incoming Florida harvest is way too small. Florida growers will collect 168 million boxes of oranges this season while analysts were expecting a crop of 177 million to 183 million boxes.

#2. Corn costs 15% more than it did last year, and 40% more than it did four years ago. It looks ready to go even higher because corn is now used as a substitute for wheat in feed grain. Why?

#3. Wheat is up a whopping 61.7% since last year! Plus, there's plenty more upside because Russia is likely to limit exports by increasing a tax on overseas shipments. Why would the Russians do that? Because their citizens are also grumbling over high wheat prices.

#4. Other breakfast prices are soaring across the board. Everywhere I look, I see costs skyrocketing …

  • The price of eggs is up a brain-scrambling 33.7% in the past 12 months!
  • Milk is up 21% over the same period!
  • And higher grain prices should jack up the price of meats, including bacon and ham!

By the way, even though American farmers just harvested a record 13.3 billion bushels of corn, the reserve supply of feed grains probably fell 18% through October 1, according to government figures. That means supplies would be the lowest since 1979!

The Table Is Becoming Crowded: Why Our Food Is Getting So Expensive

All over China and India, people are elbowing their way toward our breakfast tables. Let me explain …

World Grain Production
Consumption & Balance
Year Production
(million tons)
Consumption
(million tons)
Surplus or Deficit
(million tons)
1996
1,873
1,808
64
1997
1,876
1,820
58
1998
1,876
1,834
41
1999
1,872
1,853
19
2000
1,842
1,857
-14
2001
1,874
1,900
-26
2002
1,821
1,910
-89
2003
1,862
1,935
-73
2004
2,043
1,990
54
2005
2,009
2,014
-5
2006
1,967
2,040
-72
Source: Earth Policy Institute

As the U.S. dollar falls, the prices of U.S.-produced staples like wheat, corn, and milk skyrocket. But for people buying them in other currencies, prices don't go up nearly as much.

The people in India and China — 40% of the world's population — traditionally eat simple, vegetarian breakfasts, but they're learning to LOVE American food.

End result: Meat demand in China has quadrupled since 1980. In India, milk and egg products are becoming increasingly popular.

Booming economic growth in both of these countries is only fueling their appetites. China's economy is expanding at 11% or so, and India's per-capita income has the potential to double within ten years. In other words, more and more people can afford good, hearty breakfasts.

Another weighty matter to consider …

Americans consume an average of 3,900 calories per day. Compare that to people in India, who, according to the latest data from the UN's Food and Agriculture Organization, consume an average of just 2,440 calories per day. That means, on average, we eat 59% more per person than people in India!

Speaking as one of those Americans who could stand to skip a meal or two (or three), I won't begrudge the people in India a bigger breakfast. But it worries me to see the price of food so high and going higher!

 

As commodities guru Jim Rogers points out: The world is now consuming more food than it produces — the first time in recorded history this has happened!

Rogers has also said that soft commodities are where the biggest gains will be made over the next five to 10 years. As an investor, you can sit idly by and watch all this happen, or you can make sure you have your seat at the table …

How to Harvest This Bumper Crop of Profit Potential

I'm looking at the recent pullback in stocks like Deere & Co., a maker of farm equipment, with amazement. This is a stock that is going to reap a pile of profits as soaring commodity prices allow farmers to buy bigger and better tractors, combines, and reapers.

This stock is way off its highs — but probably not for long. And I think it's a fine way to play the agriculture boom. Of course, I have another farm equipment company that I think is an even better choice!

The farm company I've found may not be the biggest maker of equipment in the U.S., but it's growing fast and has global reach.

Now for the better news — this stock is still cheap — trading at a big discount to the S&P 500's price-to-earnings ratio. Moreover, its cash flow just hit a nine-year high … its margins are improving … and it recently beat the Street's sales and earnings expectations.

Looking forward, it raised its full-year revenue and profit forecasts, but I believe they are still too conservative. And I expect its earnings to DOUBLE in the next year!

It's just one of the picks I talk about in my new agriculture report, " 6 Stocks and 1 ETF to Ride the Agriculture Boom ." All told, I've found six stocks and one ETF that could pile up profits along with rising food prices.

To be sure, there are plenty of great beaten-down investments out there right now. So whatever you do, please take a look at the agriculture sector right now. After all, a little seed money invested now could lead to a bushel of profits come harvest time.

Yours for trading profits,

Sean

P.S. You can buy my agriculture report right now — and get it TODAY — for $198. What's more, I'm throwing in three follow-ups to tell you when to sell and perhaps when to buy more. To get your copy right now, call 1-800-291-8545 or click here .

This investment news is brought to you by Money and Markets . Money and Markets is a free daily investment newsletter from Martin D. Weiss and Weiss Research analysts offering the latest investing news and financial insights for the stock market, including tips and advice on investing in gold, energy and oil. Dr. Weiss is a leader in the fields of investing, interest rates, financial safety and economic forecasting. To view archives or subscribe, visit http://www.moneyandmarkets.com .

Money and Markets Archive

© 2005-2019 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in

6 Critical Money Making Rules