Most Popular
1. Banking Crisis is Stocks Bull Market Buying Opportunity - Nadeem_Walayat
2.The Crypto Signal for the Precious Metals Market - P_Radomski_CFA
3. One Possible Outcome to a New World Order - Raymond_Matison
4.Nvidia Blow Off Top - Flying High like the Phoenix too Close to the Sun - Nadeem_Walayat
5. Apple AAPL Stock Trend and Earnings Analysis - Nadeem_Walayat
6.AI, Stocks, and Gold Stocks – Connected After All - P_Radomski_CFA
7.Stock Market CHEAT SHEET - - Nadeem_Walayat
8.US Debt Ceiling Crisis Smoke and Mirrors Circus - Nadeem_Walayat
9.Silver Price May Explode - Avi_Gilburt
10.More US Banks Could Collapse -- A Lot More- EWI
Last 7 days
Stock Market Volatility (VIX) - 25th Mar 24
Stock Market Investor Sentiment - 25th Mar 24
The Federal Reserve Didn't Do Anything But It Had Plenty to Say - 25th Mar 24
Stock Market Breadth - 24th Mar 24
Stock Market Margin Debt Indicator - 24th Mar 24
It’s Easy to Scream Stocks Bubble! - 24th Mar 24
Stocks: What to Make of All This Insider Selling- 24th Mar 24
Money Supply Continues To Fall, Economy Worsens – Investors Don’t Care - 24th Mar 24
Get an Edge in the Crypto Market with Order Flow - 24th Mar 24
US Presidential Election Cycle and Recessions - 18th Mar 24
US Recession Already Happened in 2022! - 18th Mar 24
AI can now remember everything you say - 18th Mar 24
Bitcoin Crypto Mania 2024 - MicroStrategy MSTR Blow off Top! - 14th Mar 24
Bitcoin Gravy Train Trend Forecast 2024 - 11th Mar 24
Gold and the Long-Term Inflation Cycle - 11th Mar 24
Fed’s Next Intertest Rate Move might not align with popular consensus - 11th Mar 24
Two Reasons The Fed Manipulates Interest Rates - 11th Mar 24
US Dollar Trend 2024 - 9th Mar 2024
The Bond Trade and Interest Rates - 9th Mar 2024
Investors Don’t Believe the Gold Rally, Still Prefer General Stocks - 9th Mar 2024
Paper Gold Vs. Real Gold: It's Important to Know the Difference - 9th Mar 2024
Stocks: What This "Record Extreme" Indicator May Be Signaling - 9th Mar 2024
My 3 Favorite Trade Setups - Elliott Wave Course - 9th Mar 2024
Bitcoin Crypto Bubble Mania! - 4th Mar 2024
US Interest Rates - When WIll the Fed Pivot - 1st Mar 2024
S&P Stock Market Real Earnings Yield - 29th Feb 2024
US Unemployment is a Fake Statistic - 29th Feb 2024
U.S. financial market’s “Weimar phase” impact to your fiat and digital assets - 29th Feb 2024
What a Breakdown in Silver Mining Stocks! What an Opportunity! - 29th Feb 2024
Why AI will Soon become SA - Synthetic Intelligence - The Machine Learning Megatrend - 29th Feb 2024
Keep Calm and Carry on Buying Quantum AI Tech Stocks - 19th Feb 24

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

Stocks? Should Have Bought Breakfast!

Commodities / Agricultural Commodities Mar 20, 2013 - 04:14 PM GMT

By: Ned_W_Schmidt

Commodities

Breakfast is said to be the most important meal of the day. Thus far in 2013 breakfast has been not only that, but one of the better investments. The oats in that bowl of hardy cereal, as shown in the chart below, have been a star performer. Those lowly oats have risen in price significantly more than the stock market. Eggs and the butter that goes on the toast also did better. Forget tired tech and bumbling banks, buying breakfast instead for 2013 has been the right move.


Agri-Food Prices 2013 Y-T-D % Change

Great balls of cotton! How did cotton come to be in second place, far outpacing the stock market? Seems prices were so bad last year that farmers around the world would rather not plant the stuff. As a consequence, world cotton prices have risen by nearly 30% since the Fall low. Demand for cotton around the world has some renewed strength. Appears China missed out on that nasty recession all the gurus had forecast to happen, and the economy in that nation is strengthening. Along with demand for many commodities, Chinese purchases of cotton are recovering. U.S. exports this year, as just one example, will be down slightly from last year, but still be the third highest on record per the USDA. Exports from U.S. to China in December were up 90%.

World Cotton US$/Pound

2013 is to be a year of rotation in Agri-Commodities. In Agri-Food strong prices encourage production and weak prices discourage production. Over priced U.S. corn is encouraging farmers, all around the world, to plant as much acreage as possible in corn. At the same time former cotton producers are turning to soybeans and other crops. Such is the way it works in Agri-Foods.

This rotation does have implications for Agri-Investors. For example, farmers around the world will have good cash flow again in 2013. Part of that will be due to the quite natural rotation of Agri-Commodity prices. Deere and AGCO will gladly sell tractors to farmers regardless of the crop to be planted.

Tier One Agri-Equities vs S&P 500

As the above chart portrays, the first tier Agri-Equities have done well. They recently again reached a new high. We are by our nature nervous when stocks have had such a strong run as that pictured in the graph. That admission aside, the prospects for strong Agri-Commodity prices in the years ahead make the fundamentals of these companies some of the best to be found in the equity market.

While the rotation in Agri-Commodity prices now developing is positive for Agri-Equities, it has negative implications for poorly constructed Agri-Commodity investments. Most Agri-Commodity indices and ETFs are over weighted in corn and wheat while under weighted in those used widely in Asia. They tend to be under weighted or void of exposure to palm oil, rice, and cotton. We would avoid all of the diversified Agri-Commodity ETFs this year.

Our excitement is high as AgriMoney: Wealth Creation Through Agri-Food Investments is now available for investors. The book investors have been asking about for some tine is now a reality. AgriMoney is now the primary educational resource for Agri-Investors, new or experienced. See our web site.

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: www.agrifoodvalueview.com.

Copyright © 2013 Ned W. Schmidt - All Rights Reserved

Ned W Schmidt Archive

© 2005-2022 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