Food prices are rising as fast as, if not faster than, energy prices. And it doesn’t look like consumers will get relief anytime soon. But if you know where to look, this can be a moneymaking opportunity for you.
The U.S. Department of Agriculture recently announced that corn inventories are expected to be down to their lowest levels since 1996. Part of this is due to the recent flooding in the Midwest.
The worst thing about corn prices rising to record levels is the residual effect it will have on the price of beef, pork, and poultry. With ethanol producers, livestock producers, and food companies all trying to get their hands on as much corn as possible, prices will continue to soar. And if livestock farmers have to pay a higher price for the corn they use as feed, you can bet they will pass the cost along to the consumer.
If you are looking for a way to invest in the agricultural boom without investing directly in commodities, there is an ETF that can help you take advantage of rising food prices. The PowerShares DB Agriculture Fund (DBA), introduced in January ’07, is designed to rise as the price of agricultural products rise.
The fund has rallied recently and is a little overbought on a daily chart, but it’s worth buying on any dip.[Ed. Note: Don’t get too worked up about increases in food and gas prices. One of the biggest secrets of successful investing is that market fluctuations are good. The more the market moves, the more money you stand to make. ]