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If the commodities bubble really is popping, that may not change the forecast for food - as...

If the commodities bubble really is popping, that may not change the forecast for food - as grain traders are watching weather instead of tickers, and fundamental investors may see agriculture as "the odd one out, the attractive one in the bunch."
Comments (5)
  • Pfffft the food/grain market is too complex for crowded trade shenanigans a la Silver....
    6 May 2011, 05:40 PM Reply Like
  • for fundamental investors: people need to eat, so businesses that provide that need should do well.

     

    And even in Malaise II, businesses that provide people that need can raise their prices as needs be.

     

    On the other hand, people need a place to live...

     

    Real estate...
    6 May 2011, 06:57 PM Reply Like
  • A little help via the ethanol lobby, along with the Iowa caucuses may provide some price support as well.

     

    When somebody provides a valid argument for E-15, I may consider otherwise.
    6 May 2011, 07:53 PM Reply Like
  • There is, was, and will not be a "commodities bubble."

     

    There was a silly paper silver spike and equally silly paper silver takedown - although the real silver market remains tight, allowing producers to lock in long term contracts, like CDE's with the Chinese.

     

    This contrived paper silver spike and takedown was very much akin to the contrived paper oil spike and takedown in 2008. But this is not 2008, and no one wants it to turn into 2008. Silver should stabilize soon.

     

    Re OIL this year - very, very, very to the Nth degree different from summer of 2008.

     

    The geopolitical disruptions are entirely real and lasting for some time to come. For instance, I believe the Brent premium to WTI is now permanent.

     

    WTI - who cares? But Brent, which is priced on real world events, would turn on a dime the moment there were another major geopolitical problem - an attack in Saudi Arabia, for instance, or an attack on a major embassy anywhere in the world.

     

    Does anyone think, in the current climate, that we might not get a whole string of such shocking events within the next few weeks or months or years? Plus, if world growth is back on the table, demand for Oil will continue unabated, no matter how volatile trading is.

     

    And re Gold: Gold is a Growth sector primarily. The Fear element is secondary, although, as with Brent, it can come back into the market quickly.

     

    Among other things, China now says it "will discuss currency" at the Washington meeting next week. They have NEVER said that before.

     

    I believe the rumors of a one-off five to seven percent Yuan revaluation may be perfectly true. But China didn't act when the initial news leaked, because it hates to do anything other than surprise the market completely.

     

    Every Yuan revaluation is negative for Emperor Dollar and positive for Gold. We get prepositioning whenever the Yuan makes a move up. But this is inherently true, nevertheless, and anyone with a lick of sense knows it.
    6 May 2011, 08:39 PM Reply Like
  • Unlike other commodities, most basic food crops are highly subject to weather. However, prices - even with good weather - are subject to fuel, water, and fertilizer costs.

     

    Grain costs and supply also effect most livestock, which makes (seekingalpha.com/symbo...) and (seekingalpha.com/symbo...) very interrelated.

     

    However the best play on food may be the end producers and manufacturers, ranging all the way from Campbell Soup (seekingalpha.com/symbo...) to Ralston (seekingalpha.com/symbo...) to the new global food ETF (seekingalpha.com/symbo...)

     

    One advantage to many of the end-product food producers is that nearly all of the larger ones and many smaller ones are international and less subject to currency fluctuations. Many of the larger ones, such as General Mills (seekingalpha.com/symbo...) also pay dividends.

     

    Disclosure: Long (seekingalpha.com/symbo...), May go long (EATX)
    7 May 2011, 02:03 AM Reply Like
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