Jim Rogers, a prominent investor and author, believes that agriculture is poised for significant growth in the coming years. He warns of impending food shortages and sees opportunities for industrious individuals since few are willing to engage in farming.
“If you want to invest in agriculture, the best approach is to become a farmer,” Rogers stated. “Acquire some land and farm it, even if you’re only moderately skilled. When the industry regains its momentum, even average performers can reap substantial profits since conditions favor success.
“So if your goal is to earn significant returns, that’s your best bet. Alternatively, you can buy land and lease it to a competent farmer if you find one.”
“There are various ways to profit in agriculture, too. Consider establishing a chain of restaurants in agricultural regions, as farmers are likely to fare much better in the next three decades than they have in the past thirty. You could also open retail shops or even operate a luxury car dealership in the Midwest. There are many avenues to explore in the agricultural sector.”
Although the prospect of launching restaurants or high-end vehicle dealerships might not be feasible for everyone, many accessible options exist for the average individual.
Investing Strategies: Buy Low, Sell High
Take wheat, for instance. Profiting from rising wheat prices doesn’t necessitate becoming a farmer or directly engaging in the futures market.
Simply purchase shares of the Teucrium Wheat Exchange Traded Fund (NYSE: WEAT). This ETF is traded on the New York Stock Exchange and reflects the prices of wheat futures contracts. Here’s a look at WEAT’s recent price performance:
From September 21 to December 18, 2014, the Teucrium Wheat ETF (NYSE: WEAT) surged from $10.64 to $13.97, marking a 31 percent rise within just three months. However, since then, prices have dipped back to $12.01.
Nonetheless, this recent decline may present a promising buying opportunity. WEAT reached its peak on September 9, 2012, at $25.38, and has since experienced a steady decline, currently sitting 50 percent lower than its peak.
Today’s price may indicate a chance to buy low. In contrast, the S&P 500 has risen by 200 percent in the past six years. If you’re looking to buy low and sell high, it might be time to consider selling the S&P 500 and investing in WEAT. Additionally, there’s another factor that could elevate WEAT this year.
Shifting the Odds in Your Favor
As the Russian ruble plummeted in global markets late last year, Russian wheat exports reached unprecedented levels. The depreciated ruble provided an advantage for Russian exporters, with wheat serving as a safeguard against rapid currency devaluation, leading to a 19 percent sharp decline on December 16, 2014.
However, the Russian government could not allow such high volumes of wheat to exit the country, as this would exacerbate their currency crisis into a food crisis. Consequently, they effectively halted wheat exports in late December, imposing duties on shipments.
“The wheat market looks very promising due to the situation in Russia; food prices there have surged,” noted Kaname Gokon, general manager of research at the brokerage Okato Shoji in Tokyo. “The Russian government is rebuilding its domestic wheat supply, likely reducing exports.”
The Russian Federation ranks as the third-largest wheat exporter globally, following the European Union and the United States. Thus, when a significant portion of the expected wheat supply diminishes, the remaining stock on the market becomes more valuable, leading to an anticipated increase in prices.
Of course, predicting food prices is never a sure thing. An abundant crop could keep prices low, while unexpected weather events, like a polar vortex, could also disrupt yields and push prices higher. The elements of uncertainty are always present.
Nevertheless, investing during times of low prices amidst potential supply limitations due to governmental actions seems to improve your chances of success. We will monitor these developments as the year unfolds and provide updates on the situation.
Sincerely,
MN Gordon
for Economic Prism
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