Commodities - more than metals/oil

Wheat Prices May Reach Record, Hurting Kellogg, Helping Funds

By Tony C. Dreibus and Jeff Wilson

Oct. 30 (Bloomberg) -- A growing scarcity of wheat may send prices for the world's most-planted crop to their highest in the next six months, threatening to spur inflation in China and India and increase costs for food companies.

Reduced production because of droughts in Australia, Ukraine and the U.S. sent wheat skyrocketing 50 percent this year. Prices may jump 47 percent more to $7.50 a bushel on Chicago futures markets, matching the 1996 record, said Brent Harris, who runs the $14 billion Commodity Real Return Strategy Fund for Pacific Investment Management Co. in Newport Beach, California. Michael Lewis at Deutsche Bank AG in London said grains will outperform all other commodities in 2007....

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wayneL said:

How about softs/grains.

Sugar has had a stellar run last year and and equally tradeable sell-off this year. (Futures are just as easy to short as to long.)

The grains are the latest to go on a bullish little romp. (while most of the tradeable metals have been stagnant) i.e Wheat, Corn and the Soybean complex

Check out this bullish article

http://www.bloomberg.com/apps/news?pid=20601087&sid=aN6AH00z2lbQ&refer=home

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scsl said:

WOW! Are you planning to get in on some of these gains?

You see, I'm a fan of zinc, and seeing as the price continues to rise, you only need to buy stocks like ZFX and CBH to do very well. So with wheat set to rise, surely companies that have exposure have got to benefit? AWB springs to mind, but with all the negative media surrounding it, I'm not so keen. So what would be worth putting on the watchlist?

As long as global warming continues to worsen, I think global wheat production could be in decline from here on, and so it would make sense to hold some wheat/grain companies that will benefit from higher prices...

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Smurf1976 said:

One point to note is that with the increasing worldwide use of ethanol as a fuel, agricultural commodities are increasingly influenced by the oil price.

If oil goes to $200, for example, then there would be an awful lot more demand for ethanol. Once enough plants get built to supply it (ethanol productions isn't particularly difficult - building a plant is well within the abilities of junior companies) then demand for the feedstock booms. If oil crashes to $10 then existing ethanol demand for agricultural feedstock disappears literally overnight. Hence agricultural commodities are increasingly tied to the oil pice.

Anyone have a list of which companies on the ASX benefit from rising agricultural commodity prices? Plant based agricultural commodities that is - pigs and cows aren't useful inputs for ethanol!

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wayneL said:

Dubya will blow up a pipeline himself if this keeps up! lol

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