BCA Research projects grain prices will start moving in the second half of the year due to the aforementioned factors, along with lower wheat acreages in the U.S. and a Thai government policy that may raise rice prices. However, BCA believes prices will drop in 2012 as a result of higher production and an eventual limit to the U.S. ethanol policy.
In contrast, agriculture bulls like Bill Doyle of Potash Corp. (NYSE: POT) note that the global population is projected to expand to 9.2 billion by 2050, and food production will have to surge 70% to meet the rising demand.
“The reality is that [grain]demand has grown faster than we have been able to keep up with it. And we don’t see that changing anytime soon,” commented Soren Schroder, head of North American operations at U.S. Bunge Corp. “It’s fair to say that the overall price table of agricultural commodities have come into a new plateau, and we won’t be going back to the prices we saw four or five years ago. Those days are gone.”
For more information on the agriculture, sector visit our agriculture category.
Market Vectors Agribusiness ETF
