Food Prices: How to Prepare Your Portfolio for a Spike in Food Prices

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(List compiled by Becca Lipmann. Data sourced from Finviz.)

Corn is in nearly every US food product in some form, from Twinkies to animal feed, making corn production the single largest driver of food prices.

Here's some bad news: this year's corn yield is less than expected, meaning elevated food prices for the next year.

Fabulous! On top of the already stunted economy, high unemployment, outrageous government debt, we can count higher food prices among the catalysts for more food stamps, government subsidies, lower consumer spending, and a greater lean towards more low-cost high-calorie foods quintessential in increasing diabetes and obesity rates. Happy days indeed.

Heat waves and spring floods are largely to blame for the poor crop yield, which was originally expected to be a record high. In fact, more corn was planted this year than any other, taking arable land away from wheat and soybean - which knocked up their prices as well.

USA today reports: "U.S. corn prices have surged about 70% since August 2010 to more than $7 a bushel because of rising demand in emerging markets such as China and a Russian ban on wheat exports after a drought last year. Wheat and corn are used interchangeably as feed for cows and poultry. Corn futures for September delivery closed Friday at $7.11 a bushel."  The U.S. Department of Agriculture has cut its forecast for the fall harvest from 13.5 billion bushels to 12.9 billion.

Interested in analyzing the trend? Below we list a few companies that have an exposure to higher food prices. Use the list as a starting-off point for your own analysis.

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1. Unilever plc (UL): Food Diversified Industry. Market cap of $95.61B. The stock has gained 32.03% over the last year. Its product categories include savory, dressings & spread and ice cream & beverages. This includes soups, bouillons, sauces, snacks, mayonnaise, salad dressings, margarines and spreads, cooking products, ice cream and beverages include the sales of ice cream, tea-based beverages, weight management products, and nutritionally enhanced staples sold in developing markets.

2. Kraft Foods Inc. (KFT): Food Diversified Industry. Market cap of $59.25B. The stock has gained 19.31% over the last year. It manufactures and markets packaged food products, including biscuits, confectionery, beverages, cheese, convenient meals and various packaged grocery products. Brands include Oreo, Nabisco and LU biscuits; Milka and Cadbury chocolates; Trident gum; Jacobs and Maxwell House coffees; Philadelphia cream cheeses; Kraft cheeses, dinners and dressings, and Oscar Mayer meats.

3. Potash Corp. of Saskatchewan, Inc. (POT): Agricultural Chemicals Industry. Market cap of $43.81B. It's been a rough couple of days for the stock, losing 8.04% over the last week. It is an integrated fertilizer and related industrial and feed products company. It owns and operates five potash mines (used in fertilizer) in Saskatchewan and one in New Brunswick. Its business includes the manufacture and sale of solid and liquid phosphate fertilizers; animal feed supplements and industrial acid, which is used in food products and industrial processes.

4. Monsanto Co. (MON): Agricultural Chemicals Industry. Market cap of $34.91B. It's been a rough couple of days for the stock, losing 6.56% over the last week. It is a provider of agricultural products for farmers. It produces seed brands, including DEKALB, Asgrow, Deltapine, Seminis and De Ruiter, and it develops biotechnology traits that assist farmers in controlling insects and weeds. It also provides other seed companies with genetic material and biotechnology traits for their seed brands. It is a leader in agricultural genomics (ie, Genetically Modified Organisms or GMOs).

5. Deere & Company (DE): Farm & Construction Machinery Industry. Market cap of $29.38B. It's been a rough couple of days for the stock, losing 8.5% over the last week. It manufactures and distributes a line of farm and turf equipment and related service parts including large, medium and utility tractors; loaders; combines, cotton and sugarcane harvesters and related front-end equipment and sugarcane loaders; tillage, seeding and application equipment. Its owns and operates the popular John Deere brand of machinery.

6. Mosaic Co. (MOS): Specialty Chemicals Industry. Market cap of $28.04B. It's been a rough couple of days for the stock, losing 5.49% over the last week. It is a producer and marketer of concentrated phosphate and potash crop nutrients for the global agriculture industry. It produces phosphate-based animal feed ingredients in the United States, sells phosphate-based crop nutrients and animal feed ingredients throughout North America and internationally, and produces and sells potash throughout North America and internationally, principally as fertilizer.

7. Syngenta AG (SYT): Agricultural Chemicals Industry. Market cap of $27.11B. It's been a rough couple of days for the stock, losing 7.5% over the last week. It is an agribusiness operating in the crop protection and seeds businesses, including herbicides; insecticides; fungicides; seed treatments to control weeds, insects and diseases in crops; seeds for field crops, including corn, oilseeds, cereals and sugar beet; vegetable and flower seeds; and pot and bedding plants.

8. Archer Daniels Midland Company (ADM): Farm Products Industry. Market cap of $17.39B. The stock has performed poorly over the last month, losing 14.62%. It is principally engaged in procuring, transporting, storing, processing, and merchandising agricultural commodities and products. It is a processor of oilseeds, corn, wheat, cocoa, and other agricultural commodities and is a manufacturer of vegetable oil and protein meal, corn sweeteners, flour, biodiesel, ethanol, and other food and feed ingredients. It also has a grain elevator and transportation network to procure, store, clean, and transport agricultural commodities, such as oilseeds, corn, wheat, milo, oats, and barley, as well as processed agricultural commodities.

9. CF Industries Holdings, Inc. (CF): Agricultural Chemicals Industry. Market cap of $12.24B. The stock has gained 92.93% over the last year. It is a manufacturer and distributor of nitrogen and phosphate fertilizer products. Its principal products in the nitrogen segment are ammonia, urea, urea ammonium nitrate solution, ammonium nitrate, diesel exhaust fluid and aqua ammonia. Its principal products in the phosphate segment are diammonium phosphate and monoammonium phosphate.

10. Agrium Inc. (AGU): Agricultural Chemicals Industry. Market cap of $12.15B. It's been a rough couple of days for the stock, losing 8.37% over the last week. It is a global producer and marketer of agricultural products. It sells crop nutrients, crop protection products, seed and services directly to growers, produces, markets and distributes three primary groups of nutrients, which includes nitrogen, potash and phosphate for agricultural and industrial customers worldwide, and produces and markets controlled-release crop nutrients and micronutrients in the broad-based agriculture, specialty agriculture, professional turf, horticulture, and consumer lawn and garden markets worldwide.



The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.



This article appears in: Investing , Investing Ideas , Stocks


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