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+---- Thread: Crop commodities. (/showthread.php?tid=10974)
Crop commodities. - Vanraw - 05-15-2012
Been looking at crop commodities as a possible investment. Right now they have been dropping because of the weather. But I am of the opinion that this summer is not going to be a good crop weather year. It looks to me that any sort of whisper of droughts, or floods, or too hot or too c9old weather, drives the price up. So weather volatility = commodity price volatility.
I have never played in the space, so more then anything just watching from the sidelines, but right now may be a real good time to bet on a negative.
Have you guys played in this space?
Re: Crop commodities. - Grieve - 05-15-2012
I tend to only invest in the related stocks or ETFs, like POT (Potash) and DBA. Haven't been in a for a while - got burned on POT last year. Long term, I think food (and potash) prices are going to the moon, because of the growing population and growing middle class in developing countries, but we probably have to get past the current economic issues before we see too much more movement. If you have a long horizon, I think it's great investment.
Re: Crop commodities. - Zirak - 05-16-2012
Don't know anything about it but I can tell you that as someone who lives in an area surrounded by farmland that the weather is beautiful for crops right now and has been for weeks. Just to use my little garden as a sample - it is producing more, faster, than it has in the last 2 or 3 years.
Re: Crop commodities. - Jakensama - 05-16-2012
Grieve Wrote:Long term, I think food (and potash) prices are going to the moon, because of the growing population and growing middle class in developing countries, but we probably have to get past the current economic issues before we see too much more movement.
The problem isn't a lack of supply for people though, its transportation and distribution. Supply/demand isn't going to change much more, especially as we are steadily increasing the amount of calories per acre in crop distribution.
I think a lot of swing in food commodity prices is dependent on transport and politics (i.e. countries which subsidize which crops). We all know how unstable politics can be and I can tell you that ocean transport ain't a market I would personally invest in with confidence despite the fact that I deal with it every day..
I'd stay away from it and gamble on things you can better predict.
Then again, I think poker is a better investment than most stocks and commodities....
Re: Crop commodities. - Vanraw - 05-16-2012
Zirak Wrote:Don't know anything about it but I can tell you that as someone who lives in an area surrounded by farmland that the weather is beautiful for crops right now and has been for weeks. Just to use my little garden as a sample - it is producing more, faster, than it has in the last 2 or 3 years.
Yea I live in Iowa, and crops are 2 to 4 Weeks ahead of norm right now. Quite a few farmers rolled the dice and planted early.
But water is way down for spring, and we are due a drought. commodity prices as low now because of the optimism. I like being against over optimism....
Re: Crop commodities. - Vanraw - 05-16-2012
Grieve Wrote:I tend to only invest in the related stocks or ETFs, like POT (Potash) and DBA. Haven't been in a for a while - got burned on POT last year. Long term, I think food (and potash) prices are going to the moon, because of the growing population and growing middle class in developing countries, but we probably have to get past the current economic issues before we see too much more movement. If you have a long horizon, I think it's great investment.
I thought you made a killing on POT last year??
Re: Crop commodities. - Grieve - 05-17-2012
Vanraw Wrote:I thought you made a killing on POT last year??POT? No. I did very well at the start of the year, but then made the mistake of buying more calls spreads later on. If you look at the 2 year chart, it shot up like a rocket at the start of the year, but then slowly declined through the rest of the year.
http://finance.yahoo.com/echarts?s=POT+Interactive#symbol=pot;range=2y;compare=;indicator=volume;charttype=area;crosshair=on;ohlcvalues=0;logscale=off;source=undefined;
I posted about my "probably worthless" POT (and SLV, HAS, and FCX) spreads last year in the "Options strategies - call spreads". And as I posted in the "Five stocks for 2011" thread:
Quote:Wow, my picks for this year really sucked. Actually Apple (up around 25% right now) and SBUX (up around 40% did great), but C lost about 40%, RSX lost around 25%, and POT is down about 10%. I didn't hold onto C past January, but RSX and POT definitely burned me. I still own both, though.
It was really almost all Apple that drove my gains last year. You might be thinking of my POT position in our old Stock Market PVP game - I really should update that!