Rob Carrick for the Toronto Globe and Mail explains that energy and metals stocks have produced soaring numbers over the past few years, in part because of the developing markets in China and India, and Canada’s big energy stocks have had impressive gains with 25-35% jumps during the past year. But, he says, oil and base metals are yesterday’s news after the multi-year commodity
boom. Grain, livestock, coffee, sugar and cotton are all the talk right
Agricultural stocks are ripe for the picking now as they are benefiting from the same factors driving demand for natural resources. The recent trend in ethanol has farmers growing crops specifically for biofuels rather than food. Increases in demand for food are outpacing supply, which has given way to food inflation. Agricultural commodities are immune to economic cycles because of basic supply-and-demand factors such as global population growth and less amount of cultivated land.
For agriculture exposure, have a look at PowerShares DB Agriculture (DBA), which has holdings in corn, wheat, soybeans and sugar. There’s also the Market Vectors Global Agribusiness (MOO), which holds 40 companies on 13 exchanges around the world.
For full disclosure, Tom Lydon’s clients own shares of DBA.
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.