Thanks to record heat across much of the crucial grain growing
regions of the U.S., prices for a number of key staple products are
soaring. Front month wheat contracts have added almost 33% in the
past few weeks while comparable contracts in corn have gained about
50% in a similar time period.
It also doesn't help that other nations around the world are
seeing similar issues with their crops too. In fact, Russia's grain
crop is also plunging, offering little relief from abroad.
Some are also forecasting that this boost in prices could also
add to costs at the pump (due to heavy ethanol use) or boost meat
prices since some grains are very popular as feed for everything
from chicken, to pork and cattle (read
Is it Time to Buy the Livestock ETFs?
Thanks to these trends, worries are beginning to build that a
full blown crisis could be on our hands at some point soon, forcing
many investors to readjust their portfolios to match this new
reality. However, there are a number of ways to tackle this problem
from an investing standpoint including the following options:
Buy futures/ETFs that are tracking grains:
offer investors exposure to grain futures and could be big
winners should the drought continue. However, many of these
products have already soared in the past few weeks. How much in
gains could be left?
Invest in the fertilizer/nitrogen sector:
Terra Nitrogen (
could be big winners if farmers demand more products to boost
yields. Also, many may be able to afford more spending in this
department, especially if they are seeing high prices for their
(limited) harvests. Investors can also take a basket approach to
the agribusiness space by looking at
Short commodity end users:
Firms that have high exposure to grain or general food prices
could be in trouble as their main product costs soar. Companies
in this segment could include
Tyson Foods (
, or in the ETF world, the
Food & Beverage ETF (
What do you think? How do you play this brewing crisis from an
Do you like any of the options above or do you believe there is
a better way to approach the problem?
Let us know what you think in the comments below!
Beat the Heat with These Three ETFs
TEUCRM-CORN FD (CORN): ETF Research Reports
KELLOGG CO (K): Free Stock Analysis Report
MKT VEC-AGRIBUS (MOO): ETF Research Reports
PWRSH-DYN FD&BV (PBJ): ETF Research Reports
(TNH): ETF Research Reports
TYSON FOODS A (TSN): Free Stock Analysis Report
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