Friday, July 16, 2010

Get Your Wheat On

Monsanto (MON) continues to impress today, clearing $56... and the fertilizer stocks are showing the first signs of life in a few quarters.  (but still mostly have bad charts)  It appears wheat it rallying circa 2008. [Feb 12, 2008: Wheat is Being Ruined by ... what else... Hedge Funds and Speculators]

If interested the easiest way to get some exposure is either Powershares DB Agriculture Fund (DBA) or iPath DJ Grains ETF (JJG) [whew, it has been ages since we've mentioned those ETFs] but neither is a pure play - they mix in things like corn, soybeans, sugar, etc.

If you were not around in 2007, 2008 - things go so hot in the commodity markets they were introducing levered ETFs even in the soft commodities!.   [Apr 17: Four New Agriculture ETNs]  And that marked the top within a few months ... the rest is history. [Jun 16, 2008: Corn Rocks - Best Performing Commodity ETF/ETNs Year to Date]

Via Bloomberg:
  • Before today, wheat surged 24% this month, rising 11% in the previous three sessions alone on reports that a drought in Russia, the fourth-biggest exporter of the grain, will curb production. Investors may be selling on concern that rain may fall this weekend in Russia and the European Union, which also has been parched.
  • “It looks like we’re pricing in some Russian weather,” said Dan Kuechenmeister, the manager of the commodities department at RBC Dain Rauscher in Minneapolis. “When you see headlines that say ‘The worst drought in 130 years,’ that gets people’s attention.”
  • Wheat is the fourth-biggest U.S. crop, valued at $10.6 billion in 2009, behind corn, soybeans and hay.
Long Monsanto in fund; no personal position

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