New data to be released tomorrow may show that it’s only going to get worse. U.S. food prices rose 4% in 2007. It’s not likely to get any better this year, either: 2008 prices are forecast to rise by 4.5%. Compare that to an annual rise of 2.5% over the past 15 years, says Ellen Simon of Associated Press.
Market Vectors Global Agribusiness (MOO) may be primed to capitalize as rapid growth in China and India has increased demand for meat. Exports of U.S. products, such as corn, have increased, as the weaker dollar has only made them cheaper.
Many farmers have traded corn for soybeans in an attempt to fuel ethanol tanks, a more profitable endeavor. PowerShares DB Agriculture (DBA) holds corn, wheat, sugar and soybean futures, which may come out ahead this year.
The simple rise in transportation costs, with higher energy prices are mixing with the increase in high commodity costs of wheat, corn, soybeans and milk, which are creating havoc on food prices.
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.