Healthy soil and sustainable growing

["TradingPostPaul" <tradingpost@riseup.net>]

Okay folks, we can be the food buyer or the food seller.  Guess which one
is safer in an inflationary market? 

paul tradingpost@lobo.net

ask me about my vow of silence ;-)

*********** REPLY SEPARATOR  ***********

On 2/19/2008 at 11:44 PM activism98201@verizon.net wrote:

>'As Jim Rogers of New York-based investment firm Rogers Holdings puts it:
>"If you're in agriculture, you don't know that there is a recession, you
>don't care."'
>
>But we already knew this!  We know that it's ALWAYS true! :-)
>
>But the rest of the article portends what's coming, and that's a
>redirection of money toward food production.  Expect food prices to rise. 
>This should be a boon to the local food movement (producers).
>
>
>-Mark Nagel
>Everett, WA
>
>Source:
>http://www.bloomberg.com/apps/news?pid=20601039&sid=a25cAo8R8hjw&refer=home

>
>Food Is a Great Asset -- Minus the Fund Manager: Andy Mukherjee
>
>Commentary by Andy Mukherjee
>
>Feb. 20 (Bloomberg) -- Investors can't afford to ignore food. As a hedge
>against a possible U.S. recession, and direct exposure to rising
>urbanization and wealth in Asia, it's an asset class that's tailor-made
>for the present times.
>
>As Jim Rogers of New York-based investment firm Rogers Holdings puts it:
>``If you're in agriculture, you don't know that there is a recession, you
>don't care.''
>
>That may be as true for investors in agricultural commodities as it is for
>farmers, provided the former don't rely on the expertise of fund managers
>to beat the futures markets.
>
>The worldwide boom in agricultural commodities, fueled partly by the
>growing use of food crops as alternative fuel and partly by soaring Asian
>demand, is proving to be a hard nut for professional money managers to
>crack.
>
>According to a report last week by Merrill Lynch & Co. commodity
>strategist Francisco Blanch and other analysts, many of the actively
>managed funds focused on agriculture are failing to outperform gauges such
>as the S&P GSCI Agriculture and Livestock Total Return Index, which, when
>tracked passively, returned an impressive 28 percent last year.
>
>By comparison, the Barclay BTOP50 Index, which monitors the performance of
>the largest traders, gained 8 percent in 2007.
>
>``The promise of generating total returns by investing in agricultural
>commodity-related instruments has up to now failed to significantly
>differentiate from passive rule-based indices,'' the Merrill analysts
>noted. ``Fund managers are likely to find increasing competition from
>low-cost rule-based investment strategies.''
>
>Active Versus Passive
>
>For now, money is rushing toward a perception of competence, regardless of
>eventual performance.
>
>The ``managed futures'' business already has about $190 billion under
>supervision, almost a fourfold gain since the beginning of 2003, according
>to Fairfield, Iowa-based Barclay Hedge, which researches the industry.
>
>But where is the compensation for investors for hiring the skilled fund
>managers, paying them hefty management charges (1.5 percent of capital)
>and performance fees (a 20 percent cut of profits)? Relatively inexpensive
>exchange-traded funds, which even retail investors can access, seem to be
>making more money.
>
>The PowerShares DB Agriculture Fund, which tracks a Deutsche Bank AG
>index, gained 32 percent last year.
>
>Such bumper returns are only to be expected.
>
>Global food inventories are running thin.
>
>The amount of wheat, rice, corn, barley and other grains stored at
>warehouses around the world is enough to meet less than 60 days of global
>demand, a 35-year low, according to Merrill's analysis.
>
>High Returns
>
>Shortages are also emerging in the supplies of soybeans, palm oil and
>other oilseeds.
>
>Slaughter rates are rising as cattle-feed prices soar.
>
>All this should mean tidy profits for those investing in
>agricultural-commodity futures, provided they have the appetite for the
>higher risk of price volatility that's often seen in commodities where the
>stockpiles are small.
>
>Gary Gorton, a University of Pennsylvania finance professor, recently
>demonstrated that inventories play a significant role in determining
>returns on commodity futures.
>
>Gorton and his colleagues studied the performance of futures contracts on
>31 commodities from 1969 through 2006, grouping them in portfolios of
>lower-than-normal and higher- than-usual inventories; the former returned
>more than 13 percent annually, while the gains from the latter were less
>than 5 percent.
>
>`Chindia' Effect
>
>Eventually, food supplies will rise to match the present elevated levels
>of demand. But it may take time because of the ``Chindia'' effect.
>
>Millions of Chinese and Indian households are becoming a little more
>prosperous every year, and demand for protein is very income-sensitive.
>
>That's bound to put further pressure on stretched food supplies. Investors
>have a chance to profit from agricultural commodities because their prices
>are still ``relatively low,'' Marc Faber, the Hong Kong-based investor and
>publisher of the Gloom, Boom & Doom report, said earlier this month.
>
>To extract the excess returns for agricultural commodities, investors may
>have to bypass the active fund manager and find an exchange-traded fund
>that tracks an index passively.
>
>(Andy Mukherjee is a Bloomberg News columnist. The opinions expressed are
>his own.) 
>
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