The commodities craze spread to exchange traded funds (ETFs) awhile ago – now it’s reached Sam’s Club.
A worldwide rice shortage has led the warehouse unit of Wal-Mart (WMT) to start rationing some types of it, reports Cotten Timberlake for Bloomberg. Where allowed by law, customers are going to be restricted to four bags a visit.
Shrinking supply and rising prices have led to hoarding. Rice is a food staple for half the world, including in China, Vietnam, India and Egypt, countries that have also started restricting sales. Thailand is also considering restricting shipments.
Some of Costco’s (COST) stores are putting limits on sales of flour, in addition to those of rice.
The good news is that both stores have extensive distribution systems, enabling them to redistribute supplies.
The rice shortage is just the latest in a long line of commodities that have become more scarce and expensive recently. Rice futures have risen 26% this month. Wheat, corn and soybeans are also at record prices, which has led to riots in Haiti and Egypt.
A spokesman for the USA Rice Federation says the rice shortage should ease up with the June harvest, and may be resolved by the end of 2009.
But if you were mulling a low-carb diet, now might be the time.
Agriculture ETFs are becoming a popular way to hedge those rising prices. Some of them include:
- MLCX Grains Index ETN (GRU): The fund has 46.7% wheat, 35.4% corn, 10.1% soy meal and 7.9% soybeans.
- Market Vectors Global Agribusiness (MOO): Tracks an index of global companies primarily engaged in agriculture.
- PowerShares DB Agriculture (DBA): Tracks corn, wheat, soybean and sugar futures.
- iPath Dow Jones Agriculture (JJA): Composed of seven futures contracts, including wheat, cotton, soybean oil, coffee and sugar.
Deutsche Bank also issued a line of long/short agriculture exchange traded notes (ETNs) last week:
- DB Agriculture Double Short (AGA)
- DB Agriculture Double Long (DAG)
- DB Agriculture Short (ADZ)
- DB Agriculture Long (AGF)