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Commodities Trends: Food Prices Rose More Than Normal CPIs

 January 10, 2011 02:41 PM


Last week, precious metals and agriculture commodities had a correction while oil and natural gas rose. The extremely cold weather across the country will certainly help the heating oil and natural gas prices. 

The following table and charts show the trend scores for various commodities. Silver (SLV) continued to retain its top spot while agriculture (DBA) remains to be at the second place. 

Assets ClassSymbols01/05
Trend
Score
12/29
Trend
Score
Direction
SilverSLV29.49%39.25%v
AgricultureDBA14.5%16.84%v
Precious MetalsDBP10.63%15.59%v
CommodityDBC10.39%11.85%v
Base MetalsDBB9.9%11.43%v
GoldGLD6.77%10.66%v
EnergyDBE6.29%7.2%v
US OilUSO3.07%6.54%v
Natural GasUNG-12.91%-14.62%^

[Related -Bulls Rule As Volatility Recedes And Investors Position For Holiday Cheer]

[Related -High Bond Market Returns Offset Commodity Losses of Diversified Portfolios]

 

 

 

 

 As we are now in a new year, it is of interests to review some of commodity investing themes. In the previous articles (like this), we alluded the reasons behind precious metals investment, especially in silvers. In this article, we will look at agriculture commodities, especially food. 

Based on Food and Agriculture Organization (http:seekingalpha.comfao) of the United Nations, world wide food price rose 100% since year 2000 (7.2% annualized), compared with 2.8% annualized rate for CPI (Consumer Price Index, based on Bureau of Labor Statistics). It is clear that as globalization continues in the near future, food demand from billions of newly created middle class in emerging markets will continue to increase. It bodes well to agriculture commodity prices. 



To Summarize, agriculture commodity is in a secular long term bull market. It has a place in one's portfolios. With thatsaid, one still needs to maintain a systemic approach to manage the commodity investment.

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