Best of the Week
Most Popular
1. Gold vs Cash in a Financial Crisis - Richard_Mills
2.Current Stock Market Rally Similarities To 1999 - Chris_Vermeulen
3.America See You On The Dark Side Of The Moon - Part2 - James_Quinn
4.Stock Market Trend Forecast Outlook for 2020 - Nadeem_Walayat
5.Who Said Stock Market Traders and Investor are Emotional Right Now? - Chris_Vermeulen
6.Gold Upswing and Lessons from Gold Tops - P_Radomski_CFA
7.Economic Tribulation is Coming, and Here is Why - Michael_Pento
8.What to Expect in Our Next Recession/Depression? - Raymond_Matison
9.The Fed Celebrates While Americans Drown in Financial Despair - John_Mauldin
10.Hi-yo Silver Away! - Richard_Mills
Last 7 days
US Bond Market Yield Curve Patterns – What To Expect In 2020 - 25th Feb 20
Has Stock Market Waterfall Event Started Or A Buying Opportunity? - 25th Feb 20
Coronavirus IN Sheffield! Royal Hallamshire Hospital treating 2 infected Patients, UK - 25th Feb 20
Dow Short-term Trend Analysis - Coronavirus Trigger a Stocks Bear Market? - 24th Feb 20
Sustained Silver Rally Coming? - 24th Feb 20
Should Investors Worry about Repo Market and Buy Gold? - 24th Feb 20
Are FANG Technology Stocks Setting Up For A Market Crash? - 24th Feb 20
Gold Above $1,600 Amid FOMC Minutes and Coronavirus Impact - 24th Feb 20
CoronaVirus Pandemic Day 76 Trend Forecast Update - Infected 540k, Minus China 1715, Deaths 4920 - 23rd Feb 20 -
Ways to Find Startup Capital - 23rd Feb 20
Stock Market Deviation from Overall Outlook for 2020 - 22nd Feb 20
The Shanghai Composite and Coronavirus: A Revealing Perspective - 22nd Feb 20
Baltic Dry, Copper, Oil, Tech and China Continue Call for Stock Market Crash Soon - 22nd Feb 20
Gold Warning – This is Not a Buying Opportunity - 22nd Feb 20
Is The Technology Sector FANG Stocks Setting Up For A Market Crash? - 22nd Feb 20
Coronavirus China Infection Statistics Analysis, Probability Forecasts 1/2 Million Infected - 21st Feb 20
Is Crude Oil Firmly on the Upswing Now? - 20th Feb 20
What Can Stop the Stocks Bull – Or At Least, Make It Pause? - 20th Feb 20
Trump and Economic News That Drive Gold, Not Just Coronavirus - 20th Feb 20
Coronavirus COVID19 UK Infection Prevention, Boosting Immune Systems, Birmingham, Sheffield - 20th Feb 20
Silver’s Valuable Insights Into the Upcoming PMs Rally - 20th Feb 20
Coronavirus Coming Storm Act Now to Protect Yourselves and Family to Survive COVID-19 Pandemic - 19th Feb 20
Future Silver Prices Will Shock People, and They’ll Kick Themselves for Not Buying Under $20… - 19th Feb 20
What Alexis Kennedy Learned from Launching Cultist Simulator - 19th Feb 20
Stock Market Potential Short-term top - 18th Feb 20
Coronavirus Fourth Turning - No One Gets Out Of Here Alive! - 18th Feb 20
The Stocks Hit Worst From the Coronavirus - 18th Feb 20
Tips on Pest Control: How to Prevent Pests and Rodents - 18th Feb 20
Buying a Custom Built Gaming PC From Overclockers.co.uk - 1. Delivery and Unboxing - 17th Feb 20
BAIDU (BIDU) Illustrates Why You Should NOT Invest in Chinese Stocks - 17th Feb 20
Financial Markets News Report: February 17, 2020 - February 21, 2020 - 17th Feb 20
NVIDIA (NVDA) GPU King For AI Mega-trend Tech Stocks Investing 2020 - 17th Feb 20
Stock Market Bubble - No One Gets Out Of Here Alive! - 17th Feb 20
British Pound GBP Trend Forecast 2020 - 16th Feb 20
SAMSUNG AI Mega-trend Tech Stocks Investing 2020 - 16th Feb 20
Ignore the Polls, the Markets Have Already Told You Who Wins in 2020 - 16th Feb 20
UK Coronavirus COVID-19 Pandemic WARNING! Sheffield, Manchester, Birmingham Outbreaks Probable - 16th Feb 20
iShares Nasdaq Biotechnology ETF IBB AI Mega-trend Tech Stocks Investing 2020 - 15th Feb 20
Gold Stocks Still Stalled - 15th Feb 20
Is The Technology Stocks Sector Setting Up For A Crash? - 15th Feb 20
UK Calm Before Corona Virus Storm - Infections Forecast into End March 2020 - 15th Feb 20

Market Oracle FREE Newsletter

Nadeem Walayat Financial Markets Analysiis and Trend Forecasts

Agri-Foods Strong Bull Market Investment Fundamentals

Commodities / Agricultural Commodities Dec 31, 2008 - 05:11 AM GMT

By: Ned_W_Schmidt

Commodities Best Financial Markets Analysis ArticleGold Bugs, and others deemed misguided by the Street, missed out on another one. If they had listened to really smart people, they would have had their money with Bernie Madoff. Are Gold Bugs ever going to truly understanding real investing? You kept your wealth in Gold coins locked away at the bank or in a Gold ETF. You could have had your wealth with some really big name hedge fund-of-funds instead. You too could have had your wealth vaporized. Oh well, maybe you will get it right next time.


Those hedge funds that have been struggling to survive have, as we all know, wreaked havoc throughout the markets. One sector that seems to have witnessed the end of that selling is Gold. Another, that complements Gold investing, is Agri-Food commodities. Repeatedly journalists, untrained in reading charts, talk about commodities going down. No, that is incorrect. They have gone down, as in past tense. Most, if not all, have put in place important bottoms.

In our first chart this week is portrayed the cash price for U.S. soybeans. After having been run up during the commodity binge by hedge funds, soybean prices were run back down. Prices have now walked through the down trend line reflecting that sell off, and it is no longer controlling. The stochastic reached deeply over sold. That stochastic and the move through the down trend line taken together suggest that soybeans, and other Agri-Food commodities, have put in place important bottoms. They are now looking to establish new up trends.

With the exception of one, the prices of all of the important Agri-Food commodities we follow are up from their lows. On average, prices for the important Agri-Food commodities have risen 16% from their lows. Agri-Food stocks are up more than 50% from their lows.

A number of factors are contributing to this turn in the prices for Agri-Food commodities. First, demand for food is not so sensitive to shifting economic conditions. Chinese consumers, all 1.3+ billion of them, are still going to eat in the coming year. And given current trends, Chinese consumers will be buying an additional $40-60 billion of food each year. That is amount that each year that will be added to cumulative annual demand for Agri-Food by Chinese consumers alone.

Global grain production will probably be down in the coming year. In many countries, the credit crisis is denying farmers the most essential input for planting a crop. Good land and adequate water are little more than interesting concepts without money. Without the money to put the crops in the ground this coming year, grain production will fall. Other factors also will contribute to this tendency as the bounty of 2008 was somewhat of a fluke. Oh, and we have inept little governments such as Argentina meddling in the agricultural sector. Farming is not a factory operation, and that needs to be recognized.

Further, as the second chart below shows, the U.S. dollar has broken the up trend in which it had been trading. That up trend was destined to be broken as it was artificially induced by the collapsing hedge fund industry. As the dollar falls in value, Agri-Food commodities become cheaper to the rest of the world. Given the dollar's return to a bear market, prices for Agri-Food commodities can again rise. Those higher dollar prices will then benefit all involved in Agri-Food sector.

Rising demand and an increasing inability to satisfy that demand because of a shrinking inventory of productive land globally is a rare combination. Never in history has global demand for Agri-Food been so strong and the prospects for adding incremental farm land been so low. Agri-Food investors have never had such a positive environment unfolding without a world war.

Growing demand from Chinese consumers alone over the next decade will likely absorb the entire surplus of grains on a global basis. As the Global Agri-Food Shortage unfolds over the next decade, investors exposed to the Agri-Food sector should reap the benefits of a rare, structural long demand and short supply situation. Will your portfolio share in the wealth to be created by the very simple act of billions of consumers eating?

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 receive this publication, use this link: http://home.att.net/~nwschmidt/Order_AgriValueSALE.html

By Ned W Schmidt CFA, CEBS

Copyright © 2008 Ned W. Schmidt - All Rights Reserved

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 review a recent issue, write to agrifoodvalueview@earhlink.net

Ned W Schmidt 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