New investment tools like commodity exchange traded (ETFs) funds are allowing investors the chance to gain direct exposure to commodities, including agriculture. Soybeans is one area that is going through fundamental changes much like corn and wheat. Agricultural products are known to move in cycles, however, this time around there seems to be more of an implication for long term pricing, reports Hard Assets Investor for Seeking Alpha. Reasons for the affect on pricing include:
- Historically low inventories
- New and robust demand for animal protein
- Rising input prices such as oil, adding inflationary pressure on production
- New sources of demand for agricultural commodities
- Global warming, which will have impacts on future production
Much of the demand for soybeans comes from the U.S., China, Argentina and Brazil and is used mostly for livestock feed, as well as in food and it has industrial applications as well.
A futures-based Agriculture ETF is PowerShares DB Agriculture Fund (DBA), or for a world perspective Market Vectors Agribusiness ETF (MOO) consists of global companies involved in agriculture. DBA is up 30.9% since its January launch and MOO is up 28.3% since its September launch.
The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.