As I get older I find myself saying I remember when quite often. I remember when the headlines of the paper were splashed with “Food Crisis.” Oh, wait that was last year. Did it go away or was the food crisis mopped up by the other crises? Believe me it is still lurking out there and there are ETFs to play it.
A crisis here a crisis there
Recall in 2007 and 2008 the world really took notice of the growing concern of feeding billions of people. According to the Economist, in an article titled Whatever happened to the food crisis, the surge in food prices in 2007-2008 was largely due to population growth, urbanization, and the developing worlds shift from grains to meats. last I checked those are still significant issues. Why did the food crisis wane? The bottom falling out of gas prices surely helped, as well as the financial crisis helped divert attention.
Again?
As gas prices climb (and they will), more attention goes to ethanol which means less farm land for food stuff. Sugar and soybean prices have risen considerably lately and there are always the typical cyclical factors with commodities. To be sure the food crisis is not gone just out of sight.
Playing with your food
There is one ETF that really stands out in the agribusiness area and that is the Market Vectors Agribusiness ETF (ticker MOO). MOO is up 31.96% YTD and is above both its 50 and 200 day EMA. This ETF tracks that DAXglobal Agribusiness index which is a global index of companies that derive at least 50% of their revenue from agribusiness. There are other funds out there like the PowerShares DB Agriculture ETF (ticker DBA) that invests in futures contracts of specific food commodities. The MOO fund is more like a leveraged play on food in that as prices rise the food companies’ profits rise and in some cases more than the rise in the price of the foodstuff.
Chart courtesy of StockCharts.com
Disclosure Statement: ETFGPS is a blog that Navigates The World of ETFs. Sustainable Investment Strategies LLC is a Registered Investment Adviser in the State of Maryland, and does not hold positions in the ETF(s) listed above at the time of writing. Investors who are interested in money management services may visit the Sustainable Investment Strategies LLC web site.