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Future Looking Bright for Agriculture

by Minority Fortune

Agriculture should be a serious consideration of anyone looking for long-term investments. There is no doubt that agriculture plays a major role in our lives, providing us with the basics for food and energy. It serves as the baseline for our very existence. Now that prices are low, it provides an opportunity for those looking to buy a stake in the industry.

Agricultural funds are trading far from their previous highs. It’s no place for quick profits at the moment. Crops are experiencing a tough market. Many staples are being sold at all-time lows, even costing more to produce than the current selling prices. This may be the case for the short-term, but for long-term it will serve as a great investment due to its growth potential.

It’s common knowledge that the world population is increasing at rapid rates. With the sudden economic growth in emerging countries like Brazil, China, India, Russia, etc., demand is surely to continue rising. Agriculture provides vital crops for food and energy. Production must grow in proportion to population’s growth rate and demand. Once the surge does occur, agriculture is sure to bounce back with profits.

If you’re looking for a nice industry to add to your long-term portfolio, agriculture would indeed be a nice buy. Investopedia even provides a few funds and ETFs to look at:

For investors wanting to add agriculture stocks to a portfolio, the Market Vectors Agribusiness ETF (NYSE:MOO) provides access to 46 companies in each of five agriculture subsectors. These include product and livestock operations, chemicals, equipment and ethanol/biodiesel. This ETF gives access to equipment makers including John Deere (NYSE:D) as well as the high growth fertilizer companies such as Mosaic (NYSE:MOS). The fund charges a reasonable 0.59% in expenses.

Both the ELEMENTS MLCX Grains Index (NYSE:GRU) and ELEMENTS MLCX Bio-fuels Index (NYSE:FUE) exchange-traded notes are great ways to play the food-crop to fuel-crop relationship. Each follows a basket of futures contracts including sugar, corn, wheat, barley and soybeans among others.

For a broad based Ag Futures fund, PowerShares DB Agriculture ETF (NYSE:DBA) is a great choice. While the funds mix of followed futures has changed due to rulings by the Commodity Futures Trading Commission (CFTC), this may be a blessing in disguise. Adding commodities such as coffee, cattle and soybeans, the fund has become more of a balanced overall core futures fund. It will remain to be seen how the addition of these extra commodities adds to performance, but if long-term trends are a key, DBA should continue to perform well. (To learn more, see Use Equity ETFs To Avoid The CFTC Hassle.)

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