Those clients that have been with me the past few years know how big I am on commodities right now. The combination of Central Banks around the world printing money, limited supply and insatiable demand from many of the emerging nations (e.g. China) has been driving this Bull market the past 10-12 years. I still like gold quite a bit but I’m most confident in the agricultural commodities at this point.
The simple math of a growing global population + a limited amount of arable land on the planet = higher food prices. There’s also the growth of the middle class around the world. As the standard of living for so many people increases, so does their demand for better, higher protein foods. The issue is that raising cattle is an extremely inefficient use of calories as the total caloric output of a cow is far less than what it consumes in corn and grains.
A stronger US Dollar the past year and a half has held the price of most agricultural commodities down (low inflation), but the blistering hot weather this summer has really hurt crops sending prices higher. Over the past two weeks, corn and wheat are both up over 15%!
