Seeking Alpha

Mad Hedge Fund Trader's  Instablog

John Thomas graduated with a bachelor’s degree in biochemistry with honors and a minor in mathematics from the University of California at Los Angeles (U.C.L.A.) in 1974. He moved to Tokyo, Japan where he was employed by a medium-sized Japanese securities house. Thomas became fluent in... More
My business:
The Mad Hedge Fund Trader
  • The Coming Food Crisis is Getting Closer 1 comment
    Oct 24, 2009 06:10 PM | about stocks: AGU, POT, MON, DBA
    I don’t normally rely on National Geographic magazine for investment advice, but in the June issue the screaming long term bull case for the soft commodities is there in all its glory (see their cool website by clicking here). During the sixties, new dwarf varieties, irrigation, fertilizer, and heavy duty pesticides tripled crop yields, unleashing a green revolution. But guess what? The world population has doubled from 3.5 to 7 billion since then, eating up surpluses, and is expected to rise to 9 billion by 2050. Now we are running out of water in key areas like the American West and Northern India, droughts are hitting Africa and China, soil is exhausted, and global warming is shriveling yields.  Water supplies are so polluted with toxic pesticide residues that rural cancer rates are soaring. Food reserves are now at 20 year lows. Rising emerging market standards of living are consuming more and better food, with Chinese pork production rising 45% from 1993 to 2005. The problem is that meat is an incredibly inefficient calorie transmission mechanism, creating demand for five times more grain than just eating the grain alone. I won’t even mention the strain the politically inspired ethanol and biofuel programs have placed on the food supply. It is possible that genetic engineering, sustainable farming, and smart irrigation could lead to a second green revolution, but the burden is on scientists to deliver. The net net of all of this is that food prices are going up, a lot. Entertain core long positions in corn, wheat, and soybeans on the next dip, as well as the second derivative plays like Agrium (AGU), Potash (POT) and Monsanto (MON). You might also look at the PowerShares Multi Sector Agricultural ETF (DBA). These will all surpass last year’s stratospheric highs at some point.
    Stocks: AGU, POT, MON, DBA
Back To Mad Hedge Fund Trader's Instablog HomePage »

Instablogs are blogs which are instantly set up and networked within the Seeking Alpha community. Instablog posts are not selected, edited or screened by Seeking Alpha editors, in contrast to contributors' articles.

This post has 1 comment:

  •  
    Perhaps we shall see OFEC (Organization of Food Exporting Countries). It would be a smaller club than OPEC. And who would be the most desperate customers? Perhaps desert nations with exploding populations enabled by massive oil revenues. Time for all those dollars to come home, and for those societies to focus on earning money to feed themselves rather than causing problems for everyone else.
    Oct 26 12:47 AM | Link | Reply
Full index of posts »
Latest Followers
Posts by Ticker

Latest Comments


Most Commented
  1. Billions Will Die in the Impending Famine. Buy Ags (15 Comments)
  2. China's One Child Policy Coming Back to Haunt (9 Comments)
  3. David Rosenberg Sees an S&P 500 Range of 650-950 for Years (6 Comments)
  4. My Coming Dinner With Barrack Obama (6 Comments)
  5. The Petrobras Find is Bigger Than You Think (5 Comments)
Instablogs are Seeking Alpha's free blogging platform customized for finance, with instant set up and exposure to millions of readers interested in the financial markets. Publish your own instablog in minutes.