Posted on 08/24/2011 6:35:59 AM PDT by blam
How To Prepare Your Portfolio For A Spike In Food Prices
Kapitall
Aug. 24, 2011, 5:48 AM
Corn is in nearly every US food product in some form, from Twinkies to animal feed, making corn production the single largest driver of food prices.
Here's some bad news: this year's corn yield is less than expected, meaning elevated food prices for the next year.
Fabulous! On top of the already stunted economy, high unemployment, outrageous government debt, we can count higher food prices among the catalysts for more food stamps, government subsidies, lower consumer spending, and a greater lean towards more low-cost high-calorie foods quintessential in increasing diabetes and obesity rates. Happy days indeed.
Heat waves and spring floods are largely to blame for the poor crop yield, which was originally expected to be a record high. In fact, more corn was planted this year than any other, taking arable land away from wheat and soybean - which knocked up their prices as well.
USA today reports: "U.S. corn prices have surged about 70% since August 2010 to more than $7 a bushel because of rising demand in emerging markets such as China and a Russian ban on wheat exports after a drought last year. Wheat and corn are used interchangeably as feed for cows and poultry. Corn futures for September delivery closed Friday at $7.11 a bushel." The U.S. Department of Agriculture has cut its forecast for the fall harvest from 13.5 billion bushels to 12.9 billion.
Interested in analyzing the trend? Below we list a few companies that have an exposure to higher food prices. Use the list as a starting-off point for your own analysis.
(snip)
(Excerpt) Read more at businessinsider.com ...
I am sure a surge in food prices will send Obama’s polling down another 5 to 8 points. In that case I shall grin and bear it.
Complexity Theorists Predict Food Crisis, Riots and Civil Unrest By April 2013
I don’t understand why the potash corp of saskatchewan would have food price exposure.
Later, traveling down I-29 into Iowa/Nebraska we discovered that the massive spring flooding was still in full force - you could look in any direction across the "lakes" and see just the peaks of barn roofs....total devastation for an entire region.
No, that's not commentary, it's the ticker symbol of the Market Vectors Agribusiness ETF. It holds shares in most of the companies mentioned in the article; its largest holdings include Deere, Potash, Monsanto, Syngenta, and Mosaic.
MOO's a good way to play rising food commodity prices, in my opinion. Of course, you could buy the commodities themselves, but they are highly volatile. Safer to go with major publicly held corporations whose seed, fertilizer, and farm equipment businesses may benefit from a long-term uptrend in commodity prices.
It's fertilizer, the bet being that rising prices will cause farmers to try to maximize their crop yield per acre, and/or to cultivate additional land.
Potash is the primary source for potassium, a key ingredient in fertilizer.
See: http://en.wikipedia.org/wiki/Potash
In other words, stock up on food now! Hopefully, you have already stocked up on the items in my tagline.
Anyone still worried about their portfolio is obviously not in tune with the likely ramifications of either a win OR a loss for Obama in 2012.
PING!
***Potash is the primary source for potassium, a key ingredient in fertilizer.***
Maybe it is time to reopen the potash mines east of Carlsbad, NM. Just ignore that residual radiation from the Project Gnome blast back around 1962.
Take food out of the mouths of the poor
and put it in the gas tanks of the rich...
What could possibly (dare I say "unexpectedly"?) go wrong?
National emergency.
Martial law.
Elections "temporarily" suspended.
Besides, how could we have a fair election when the opposition candidate gets assassinated right before the election, hmmm?
That seems a long ways away, probably sooner than that.
Part of my plan includes hunting, trapping, and fishing. I do understand that once the food supply goes down, the wildlife population will disappear within 12 months. That's where trapping and fishing come in.
Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.