There is a very hot story developing in agriculture right now that every well-informed investor needs to know about.
On the back of surging demand and erratic global weather patterns, multiple key agricultural commodities like wheat, sugar, cotton and coffee are trading at or near historical highs, creating some very compelling investment opportunities for those following the story.
Let’s go ahead and take a closer look.
This spring and summer, a devastating heat wave and drought swept through Russia, putting a serious dent in one of the world’s largest wheat producers annual production. The event led the country to ban wheat exports until next year, which sent wheat prices soaring to a multi-year high.
Sugar has also seen big gains in the last few months, recently hitting a new 29-year high after analysts cut their projections for Brazil’s output, the world’s largest producer and exporter. That development comes on the heels of a 2009 that saw sugar prices more than double.
If you notice higher prices for clothes this winter, here is why. Cotton recently traded to a 44-year high on surging demand from China after Pakistan, the world’s fourth largest producer of Cotton, suffered from massive floods that are expected to cut into their usual production capacities. Rumors of weak production out of China, the world’s largest producer, also helped to drive prices higher.
Just in case there is anyone left out there who isn’t convinced of the secular growth trend occurring in agricultural on growing demand and erratic weather, let’s go ahead and take a quick look at coffee, recently hitting a 12-year high after supplies of Arabic beans from Columbia fell to a 33-year low.
So as you can see, the agriculture sector is booming right now. And although there is bound to be plenty of volatility in the short run as the relationship between supply and demand fluctuates, the long-term trend of surging demand from emerging markets and erratic global weather patterns clipping production should provide plenty of support for long-term gains.
Here is a list of four awesome agriculture stocks to take advantage of the trend.
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