megiddo666

A Complete Guide to Agriculture ETFs

Might add the ETF - DAG to the list as well.

Wheat Crisis: The Next Black Swan?

He's quoting a June 14, 2009 LA Times article by Karen Kaplan. The LAT article is a fairly decent piece of research, especially highlighting US wheat vulnerability. There are a couple of issues I'd take with this piece, however.

First of all if there is a major outbreak of Ug 99, wheat stem rust in Asia, it might be better to use DAG to maximize your return.

Second, AFK would not be an effective investment vehicle. The African countries are already affected, such as Uganda and Kenya, and the ETF would likely drop as ecnomies are further impacted.

Also, one needs to add Eritrea to the list of Ug 99 infected countries.

Finally, El Nino's potential impact on Australian grain production, and that of India and Pakistan may have a more immediate impact on crop yields/grain supplies than Ug99.

The Wheat Debate

There are a set of weather/climate issues behind grain sales and purchases in addition to currencies and the BDI. Additionally, input timing and costs (such as fertilizer) are an influence and are impacted by future crop intentions. Fertilizer stocks may be down, but that has not lowered the need for their use and shipment.

Iran's aggressive purchasing is due to a 3-5 million ton shortfall in the wheat harvest due to drought, a concern for Egypt as well, since its imported wheat has been supplied -- usually by Syria. However that source is not availabe since they too are suffering from severe drought. Syria is also importing wheat, barley, and perhaps other bulk foods this year, as well as Iraq.

China's soybean price drop was based upon good crop expectations (a 37% increase over last year), which are now in slightly doubt given drought in NE China. If the Chinese soybean or corn crop is less than expected, Brazil and the US will be the likely markets they will purchase from.

Given the additional movement of wheat and other bulk dry goods, it is possible this may impact DRYS, and other shippers who specialize in wheat, barley, etc. vs. ores and minerals.

Commodity Analysts Believe the Party's Over

Bespoke, usually I might generally agree with the analysts....However on wheat, and especially rice, plus other grains, there is too much damage, drought, floods, snow, and shortfalls of fertilizer use in India, Pakistan, Africa, etc, to make the case for prices to fall that much. China -- who really knows how much the Chinese are hedging on what they say to not have prices go sky high on crop shortfalls......Rice, for example, is not expected by most analysts I've read in Asia to drop in price, even after spring harvest, and the US is announcing that less rice will be planted this year...for 08-09.

Buying Powershares DB Agriculture Fund on Food Shortages and Inflation

While I agree on the investment hypothesis in regard to agriculture -- I have been in DBA for months, I would disagree on the FED creating or "feeding" an inflationary agricultural "bubble."

Agriculture price increases are not generated by FED rate policy. If you check the USDA global crop demand reports, and follow the global problems of drought, flood, pestilence, cold, heat, etc, this becomes more apparent. The current winter problems in China in regard to agriculture is only the one grabbing headlines. The agricultural problems are far more widespread.

Agriculture is simply going up because of shortfalls in production and increased global food demand. Supply is not catching up across the product spectrum.

DBA, JJA, JJG, and MOO are all reasonable options for investing in a range of agricultural opportunities, in addition to specific companies.

Food Inflation Hits the News, Time to Look at Agricultural ETFs

Good summary, which adds to my own research. From Africa, Australia, China, to the Middle East, food is a major issue, and worse in some areas than the FAO is describing, or the Chinese are admitting. Weather and climate are both influencing grain outcomes for 2008. Not only DBA and MOO, but Barclay's JJG and JJA, plus RJA are vehicles to invest in this situation, in addition to fertilizer and seed firms.

Thursday Outlook: Sectors and International

David, I always look forward to these reports and find them extremely helpful. However on your DBA comments, while wheat planted area was down in the US last year, that is no longer the case. Corn acerage is now down, wheat and soyabeans has increased and is expected to increase for 08/09. See the Dec. 11, 2007 U.S. Wheat Associates report for the latest, slide 56.
www.uswheat.org/supply...#