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Why Food Stocks Are Best Picks Today (Part 1)

4 December 2007 - Features - Editor

It is a matter of global shame, but a financial planning fact nevertheless: there is money to be made from hunger. Investors have many choices of routes to make profits from food stocks. An occasional bountiful harvest here and there may temporarily depress inflation in grain, meat, and other farm produce prices, but since everything we eat takes at least months to grow, there is money to be made from short selling food stocks as well. Branded food stocks have always been attractive, and this trend is set to explode as we close gaps between nutrition and therapeutics.

A strong foundation for financial planning is to invest in stocks with high probabilities of growth and profit. This is why exaggerated predictions of how a stock index may move in the future increase risks unduly. It is always better to realize a modest capital gain from a rise in stock price than to rue missed opportunities to make the quick killings promised by an incompetent financial advisor. Similarly, comforting guidance from an executive is no substitute for stock dividends in your bank account! That is why all food stocks are so attractive: there will be more of us around in to the foreseeable future, and we all need to eat, dress, and source bio-fuels from disappearing arable land!

Financial Planning through Grain Futures

Food stocks are primordial forms of stock market development. Chicago set a lead for the world by establishing a stock trade in estimating future prices of agricultural commodities. The stock exchange of this metropolis rarely gets credit for its yeoman service to the cause of food stocks over decades. It is fashionable to rejoice in the dazzling achievements of NASDAQ, and to agonize over NYSE volatility, but veteran investors in stocks know that the real action is often in the classic stock trading ring of the Mid-West. The Chicago Board of Trade (CBOT) has held its vanguard position of global trading in food stocks, and is set to increase its lead further in future.

City slickers are notorious about their ignorance of agriculture. It is no matter for wonder therefore that many of them have portfolios without top stock picks from various food sectors. Dealing in grain futures calls for special skills, and there are commensurate financial planning benefits for anyone who makes an effort to use CBOT resources wisely. Agronomists have distinct advantages in this regard because they are able to predict changes in land productivity weeks and months before harvest time. The spatial spread of cropping season across the globe is another enabling feature of stock trading in farm produce. Fungal epidemics in Brazil can predict coffee bean inflation months in advance with near certainty.

 


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