Investing in Grains
Grains are one of the only real assets an investor can utilize in nearly any market. Grains are cheap, mostly unrelated to economic cycles and independent of interest rates. The market is also advantageous to investors interesting in hedging against the future challenges of global warming, dwindling water sources and the growth of China and India.
When an investor wants to leverage the power of cheap, tangible asset, grain provides one of the best options. According to Marc McLornan of Agro Terra Ltd., since the end of World War II, agricultural grains have been virtually uncorrelated to the economic cycle of the greater market. Population growth, changes in standard of living worldwide and the capacity of production are the primary factors in the valuation of grains. Despite the global downturn of 2008, grain prices have nearly doubled since January 2005.
Grains are also one of the most diverse commodities on the market. Buyers have the option to invest in wheat, barley, oats, corn and others. Each of these assets maintains a strong presence on the market. In addition, they are used by nearly every aspect of the food industry, guaranteeing their increased presence in the marketplace. Basically, no one can replace the need for grains in our food source, hence, they will continue to maintain their value in the form of grain futures. As the need for food rises with population growth, these commodities will only continue to gain value, making grain investing a wise choice for diversification. While its not geared towards immediate gains, the market generally continues to move up at a steady pace over time.
Above: Rolled oats. (Supplied by Hawkwang at Wikimedia Commons; Public Domain; http://upload.wikimedia.org/wikipedia/en/9/97/Rolled_oats.jpg)