Prices are rising all around us, yet agricultural commodities have for the most part been left behind and remain at historically depressed levels. Fundamentals for agriculture are improving on a daily basis. A worldwide shortage of farmers combined with food inventories falling to record lows is setting up the perfect storm for an explosion in agriculture prices. There is a huge opportunity today to invest at the ground-floor into what will likely be one of the biggest boomThe release notes that wheat is down 80 percent from its inflation adjusted high, which was set in the 1970s, while corn is down 75 percent from its inflation adjusted high, which was also set during the 1970s. The release theorizes that since crude oil continues to rise in price there will be an increased demand for alternative energy sources. This increased demand should increase demand for wheat, corn, and sugar that are used to make alternative fuels. Therefore, according to the NIA, “A massive rise in agriculture prices is just around the corner.”
industries of the next several decades.
This increase in prices in agriculture will naturally lead to increases in the price for food, which means more income from Americans will be dedicated to food purchases than in the past. The NIA predicts the amount of income Americans spend on food will increase from 10 percent to 30 percent, particularly if the US dollar continues to lose purchasing power.
The NIA reports:
The U.S. is currently the world's largest exporter of wheat and corn and the fifth largest exporter of sugar. When American consumers purchase food at their local supermarket, they are competing against consumers from all around the globe. As the Federal Reserve prints trillions of dollars out of thin air and causes our currency to lose its purchasing power, Americans won't be able to afford to eat as much and farmers will be forced to increase their exports to countries with stronger currencies.The NIA notes that food shortages in China will allow “Chinese agriculture companies [to] have a chance of becoming the market’s biggest gainers of the next decade.”
To read the NIA release on Reuters online click here.
Posted: 10/30/09
