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
The AI Mega-trend Stocks Investing - When to Sell? - 28th May 20
Trump vs. Biden: What’s at Stake for Precious Metals Investors? - 28th May 20
Stocks: What to Make of the Day-Trading Frenzy - 28th May 20
Why You’ll Never Get Another Stimulus Check - 28th May 20
Implications for Gold – 2007-9 Great Recession vs. 2020 Coronavirus Crisis - 28th May 20
Ray Dalio Suggests USA Is Entering A Period Of Economic Decline And New World Order - 28th May 20
Europe’s Coronavirus Pandemic Dilemma - 28th May 20
I Can't Pay My Payday Loans What Will Happen - 28th May 20
Predictive Modeling Suggests US Stock Markets 12% Over Valued - 27th May 20
Why Stocks Bear Market Rallies Are So Tricky - 27th May 20
Precious Metals Hit Resistance - 27th May 20
Crude Oil Cuts Get Another Saudi Boost as Oil Demand Begins to Show Signs of Life - 27th May 20
Where the Markets are heading after COVID-19? - 27th May 20
Silver Springboards Higher – What’s Next? - 26th May 20
Stock Market Key Resistance Breakout Is Where the Rubber Meets the Road - 26th May 20
5 Ways To Amp Up Your CFD Trading Today - 26th May 20
The Anatomy of a Gold Stock Bull Market - 26th May 20
Stock Market Critical Price Level Could Soon Prompt A Big Move - 25th May 20
Will Powell Decouple Gold from the Stock Market? - 25th May 20
How Muslims Celebrated EID in Lockdown Britain 2020 - UK - 25th May 20
Stock Market Topping Behavior - 24th May 20
Fed Action Accelerates Boom-Bust Cycle; Not A Virus Crisis - 23rd May 20
Gold Silver Miners and Stocks (after a quick drop) Ready to Explode - 23rd May 20
3 Ways to Prepare Financially for Retirement - 23rd May 20
4 Essential Car Trade-In Tips To Get The Best Value - 23rd May 20
Budgie Heaven at Bird Land - 23rd May 20
China’s ‘Two Sessions’ herald Rebound of Economy - 22nd May 20
Signs Of Long Term Devaluation US Real Estate - 22nd May 20
Reading the Tea Leaves of Gold’s Upcoming Move - 22nd May 20
Gold, Silver, Mining Stocks Teeter On The Brink Of A Breakout - 21st May 20
Another Bank Bailout Under Cover of a Virus - 21st May 20
Do No Credit Check Loans Online Instant Approval Options Actually Exist? - 21st May 20
An Eye-Opening Perspective: Emerging Markets and Epidemics - 21st May 20
US Housing Market Covid-19 Crisis - 21st May 20
The Coronavirus Just Hit the “Fast-Forward” Button on These Three Industries - 21st May 20
AMD Zen 3 Ryzen 9 4950x Intel Destroying 24 core 48 thread Processor? - 21st May 20
Dow Stock Market Trend Analysis and Forecast - 20th May 20
The Credit Markets Gave Their Nod to the S&P 500 Upswing - 20th May 20
Where to get proper HGH treatment in USA - 20th May 20
Silver Is Ensured A Prosperous 2020 Thanks To The Fed - 20th May 20
It’s Not Only Palladium That You Better Listen To - 20th May 20
DJIA Stock Market Technical Trend Analysis - 19th May 20
US Real Estate Showing Signs Of Covid19 Collateral Damage - 19th May 20
Gold Stocks Fundamental Indicators - 19th May 20
Why This Wave is Usually a Market Downturn's Most Wicked - 19th May 20
Gold Mining Stocks Flip from Losses to 5x Leveraged Gains! - 19th May 20
Silver Price Begins To Accelerate Higher Faster Than Gold - 19th May 20
Gold Will Soar Soon; World Now Faces 'Monetary Armageddon' - 19th May 20

Market Oracle FREE Newsletter


Agri-Foods Price Correction Breeds Investor Opportunities

Commodities / Agricultural Commodities Aug 07, 2011 - 06:18 AM GMT

By: Ned_W_Schmidt


Best Financial Markets Analysis ArticleTime is an important component of both healing and financial corrections. Some times, it just takes time. To date, the correction in Agri-Food prices, as shown by the index in the chart below, has been modest. The Agri-Food Price Index has declined less than 7% from the high to the recent low. That would be considered modest by most.

The duration of the current correction is about 26 weeks. The time dimension may be more important than the depth dimension this cycle. The two rectangles in the chart above are identical. For that reason, they envelop the same time range. They have been positioned as best can be at the top in each of the two cycles portrayed. That rather simplistic analysis would suggest that the end of the Agri-Food price consolidation is rather close.

However, like all corrections, or bull markets, considerable divergence can occur between the various sectors of a market. Bottom chart to the right portrays the action during this correction of a good sample of commodity prices, both Agri-Food and others. Rice and hogs continue to be the strongest two Agri-Food prices. At the other end of the spectrum, cotton has crashed and wheat seems far from shortage this year. Interesting to note is that the pound of butter in your refrigerator has been a better investment than Silver. Beef prices are down because ranchers have been liquidating herds due to the drought. Growing grass without rain is tough.

Last we visited on this topic we talked about hogs. Since that time hogs continue to be a hot topic. Demand remains strong, particularly from China. China is apparently importing pork to hold down prices. Some indications they are having success with their approach to constraining Agri-Food prices. We do not suggest that one should sell Silver and buy hogs, though that would have been an excellent idea at one point. Rather, high and rising prices do eventually set up conditions for weaker prices in the future.

In the mean time, hog and pork producers should experience a good environment as the above picture is one of demand pulling prices higher. Consumer demand for pork is pulling that price higher which translates into hog prices being pulled higher. At the same time grain prices are moderating. Pork is not made in a factory, but produced by feeding hogs grain. This combination of developments should benefit hog and pork producers through the remainder of this year and into the next. Agri-Equities to review include, but are not limited to, FEED, SFD, and HOGS.

Consolidations such as now being experienced by Agri-Food prices provide an opportunity for investors due to the longer term nature of the Agri-Food Super Cycle. Often mentioned is that China is attempting to feed 21% of the world's population with 7% of the world's arable land. However, ignored is that India is attempting to feed 17% of the world's population with a mere 2% of the world's arable land. The only chance of success in feeding their populations is by raising incomes so that their consumers can buy the Agri-Foods in world markets. As both are in Asia, the most logical choices for investors are Asian Agri-Equities.

By Ned W Schmidt CFA, CEBS

AGRI-FOOD THOUGHTS is from Ned W. Schmidt,CFA,CEBS, publisher of The Agri-Food Value View, a monthly exploration of the Agri-Food grand cycle being created by China, India, and Eco-energy. To contract Ned or to learn more, use this link:

Copyright © 2010 Ned W. Schmidt - All Rights Reserved

Ned W Schmidt Archive

© 2005-2019 - 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