Wednesday, June 15, 2011

Banking off High Food Prices - CF Holdings vs. Archer Daniels Midland

HiddenLevers submits:

By Vivek Dasari + Raj Udeshi

Agricultural commodities came close to their all-time highs in mid-February. Despite the market turbulence we've been experiencing the past few months, and the headwinds ahead, agricultural commodities look to be a promising investment choice.

David Hallam, director of FAO's Market and Trade Division, warned last week that the short supply of agricultural commodities will drive up the price of food in the low-income food-deficit countries, like Egypt. One reason for the shortage ? grain supplies being dangerously low due to hostile weather. Bloomberg noted that "parts of China, the biggest grower, had the least rain in a century, some European regions are the driest in 50 years and almost half the winter-wheat crop in the U.S., the largest exporter, is rated poor or worse."

Not only are the agricultural commodities supply unusually low, but also demand for these commodities are continuing to rise. Despite

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