Food prices are on the rise and primed to rise further. We can’t do anything about what you’re paying at the grocery story, but we can point you to some exchange traded funds (ETFs) that will help you benefit.
Here’s how crazy it’s getting:
- Trader Mark for International Business Times reports that an index of 55 food commodities tracked by the Food and Agriculture Organization gained for a sixth month to 214.7 points, above the previous all-time high of 213.5 in June 2008.
- Last month’s year-on-year rise compares with the 43 % jump in food costs in June 2008. Record fuel prices, weather- related crop problems, increasing demand from the growing Indian and Chinese middle classes, and the push to grow corn for ethanol fuel all contributed to the crisis that year. [Agriculture ETFs: No Signs of Stopping.]
Javier Blas for Financial Times reports that the United Nations has sounded the alarm, too: the world will face a food price shock, and agricultural commodity prices are likely to rise further. There is nothing indicating this is the peak ,and prices will stage their rise well into the new year. Agricultural products such as wheat, corn, vegetable oil, dairy products, sugar and meat are all at risk.
Play the food price spike from an agriculture/commodity standpoint:
- PowerShares DB Agriculture (NYSEArca: DBA): Tracks a basket of futures that includes corn, soybeans, sugar, cattle, cocoa, coffee, cotton lean hogs and wheat.
- Market Vectors Agribusiness (NYSEArca: MOO): Tracks an index of global agricultural commodity producers.
You can also hedge your exposure to food prices by checking out ETFs that hold the companies that put the food on the shelves at your local grocery:
- PowerShares Dynamic Food & Beverage (NYSEArca: PBJ): Names include Starbucks (NYSE: SBUX), Yum! Brands (NYSE: YUM), General Mills (NYSE: GIS), HJ Heinz (NYSE: HNZ) and Kroger (NYSE: KR).
- Consumer Staples Select Sector SPDR (NYSEArca: XLP): Names include Wal-Mart (NYSE: WMT), Kraft Foods (NYSE: KFT), Kellogg (NYSE: K) and Sara Lee (NYSE: SLE).
Tisha Guerrero contributed to this article.
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.