Profiting From a Hungry, Growing World

| About: VanEck Vectors (MOO)

Nine billion. That's how many people will need to eat in 2050: Two billion more than today. The number is huge, but the growth rate is only 0.6% a year -- considerably slower than the pace we have grown at.

So why are food prices skyrocketing? Most likely, it is a short-term mismatch between supply and demand -- much like in 2007-08. And, like then, prices will return to Earth, likely sooner rather than later. Prices on soft commodities are only now flirting with the highs seen in mid-08. A short-term punt on commodity prices at this time could end badly. But with food demand rising steadily, firms providing agri-inputs -- fertilizers, hi-tech seeds, tractors -- are a better long-term investment.

Two agri-business ETFs stand to benefit: the Claymore Global Agri ETF [TSE:COW], and the Van Eck Agri ETF, MOO. Both hold companies like Potash Corp. (NYSE:POT), Monsanto (NYSE:MON) and John Deere (NYSE:DE), as well as emerging market names like Wilmar (OTCPK:WLMIF), a big Asian palm oil producer, and Brasil Foods (NYSE:BRFS), the chicken grower that Warren Buffett invested in last week.
Of the two, MOO is more diversified (44 vs. 35 holdings) and has 12x more AUM. The Canadian COW (Ed. Note: not to be confused with the U.S. iPath COW) has a higher dividend (1% vs 0.6%) and trades in C$ (though unhedged). Both have dipped recently, and will dip further when food prices fall. But as a long-term holding, either is a solid bet on our ravenous appetite.
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archerETF Metrix MOO
Category U.S. Equity
Benchmark S&P 500
Total Holdings 44
52-Week High $57.77
Recent Price $55.58
52-Week Low $35.98
Avg Daily Volume 1.63 Million Shrs
Avg Daily Volume ($) $90.56 Million
Total Market Cap $3.76 Billion
ETF Annual Fee 0.59%
ETF Trading Currency USD
ETF FX Exposure USD 50% / Various 50%
Annual Volatility 35.08%
Correlation to S&P 500 Not Available
Return to Risk Ratio Not Available
Use of Leverage No
Use of Futures No
6-month Return 27.42%
1-Year Return 25.24%
2-Year Return 125.20%
3 Year Return -0.45%
Dividend Yield (TTM) 0.59%

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

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