• 287 days Will The ECB Continue To Hike Rates?
  • 287 days Forbes: Aramco Remains Largest Company In The Middle East
  • 289 days Caltech Scientists Succesfully Beam Back Solar Power From Space
  • 689 days Could Crypto Overtake Traditional Investment?
  • 694 days Americans Still Quitting Jobs At Record Pace
  • 696 days FinTech Startups Tapping VC Money for ‘Immigrant Banking’
  • 699 days Is The Dollar Too Strong?
  • 699 days Big Tech Disappoints Investors on Earnings Calls
  • 700 days Fear And Celebration On Twitter as Musk Takes The Reins
  • 702 days China Is Quietly Trying To Distance Itself From Russia
  • 702 days Tech and Internet Giants’ Earnings In Focus After Netflix’s Stinker
  • 706 days Crypto Investors Won Big In 2021
  • 706 days The ‘Metaverse’ Economy Could be Worth $13 Trillion By 2030
  • 707 days Food Prices Are Skyrocketing As Putin’s War Persists
  • 709 days Pentagon Resignations Illustrate Our ‘Commercial’ Defense Dilemma
  • 710 days US Banks Shrug off Nearly $15 Billion In Russian Write-Offs
  • 713 days Cannabis Stocks in Holding Pattern Despite Positive Momentum
  • 714 days Is Musk A Bastion Of Free Speech Or Will His Absolutist Stance Backfire?
  • 714 days Two ETFs That Could Hedge Against Extreme Market Volatility
  • 716 days Are NFTs About To Take Over Gaming?
Billionaires Are Pushing Art To New Limits

Billionaires Are Pushing Art To New Limits

Welcome to Art Basel: The…

What's Behind The Global EV Sales Slowdown?

What's Behind The Global EV Sales Slowdown?

An economic slowdown in many…

  1. Home
  2. Markets
  3. Other

Agri-Food Thoughts

With paper oil prices having peaked, we keep hearing a question that demonstrates the uninformed minds of many strategists and talking heads in the business media. That question is, "Have commodity prices peaked?" Again, commodities is not a homogeneous asset class. Comprising it are actually three separate and distinct commodity groups. Energy, minerals, and Agri-Food are the three major genus of the family referred to as commodities. Each is driven by different and unique factors. Each will have a individualistic investment cycle that will drive prices and returns. Falling oil prices may tangentially influence some Agri-Food prices, but do not dominate them. However, the greater impact of lower oil price may be the reduction in costs and improved profitability.

This week's chart shows the slope and the strength of the trend for the components of our Base Agri-Food Price Index. A positive value for the slope of the price trend for an Agri-Food commodity means the price trend is rising. At this time of the year, with Northern hemisphere crops in the ground, weather tends to influence prices. It does that every year. Weather in any single planting cycle is a transitory influence on price, and does change longer term trends. Individual Agri-Food commodities are ranked in the chart by the strength of the price trend. Rice, soybeans, and corn dominate all, as they do in the headlines of the popular press. More important may be that meat group has, with exception of feeder steers, developed positive trends. That development may mean that breeding and feeding side of business may have finally adjusted to higher cost of feed grains. While analysts talk about demand destruction due to high oil prices, we have less concern for that possibility in Agri-Foods. Consumers in BRIC, particularly China and India, are becoming wealthier. Their demand for Agri-Foods will only increase over next ten years. Why worry about loan losses when one can invest in Agri-Food sector?

AGRI-FOOD THOUGHTS are from Ned W. Schmidt,CFA,CEBS, publisher of Agri-Food Value View, a monthly exploration of the Agri-Food grand cycle being created by China, India, and Eco-energy. To review a recent issue, write to agrifoodvalueview@earthlink.net.

 

Back to homepage

Leave a comment

Leave a comment