The grains have made a big move up in recent years. Should we be considering the grains as a place for a bit of our long term asset allocation? Futures Magazine features a story about the grains in its current issue. The carry over stocks of the grains are at historically low levels. China, India, Russia, and South Korea are feeding more cattle and hogs for slaughter. But, wheat has been over planted and the price has pulled back significantly.
Dennis Gartman, at a recent conference, provided insight into the long term trends of various commodities including the grains. He is still recommending the purchase of corn and soybeans. He is counting on the growth of the middle class in China to continue and for an increasing amount of grain to be fed to livestock.
Are the grains still a long term buy at this point? Will the rise of the middle class around the world continue to drive up demand? Will ethanol production in the U.S. continue to consume the U.S. corn surplus?
If you do not have a futures account, you can still access the grain markets via the Powershares DB Agricultural Fund (DBA). The plot above shows the price of DBA over the last year. This fund buys corn, soybeans, wheat, and sugar.
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