Thursday, February 28, 2008

Crops On the Knife's Edge

{Here At SOC, we've been grain bulls for awhile. Position your portfolio towards the "agri-business" stocks and you'll do well in the medium-term.}
“If you had any major upset,” warns William Doyle, CEO of Potash -- the world’s largest maker of crop nutrients -- “where you didn't have a crop in a major growing agricultural region this year, I believe you'd see famine.''
Global grain supplies briefly touched all-time lows late last year, and have barely recovered since.
“We keep going to the cupboard without replacing,'' Doyle explained to Bloomberg this week, “and so there is enormous pressure on agriculture to have a record crop every year. We need to have a record crop in 2008 just to stay even with this very low inventory situation.''
“There’s no room for error,” laments our resource trader Kevin Kerr. “Feels a lot like the energy refining situation in the U.S. One bad weather scenario and suddenly we have a whole different pricing matrix. If we get a drought here like they suffered in Australia last year and it impacts soybeans during the critical pod stage, or if it were to roast 50% of the corn prior to harvest, imagine where that would (will) send prices.
“My advice, stock up on those cheap soybeans at 13.50 and $5 corn.”

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