The biofuels industry is also the cause of soaring food prices. Investors are closely watching the booming agriculture market and a chance to profit. However, inflation doesn’t always get much attention in the U.S. because food accounts for such a small part offer overall household budgets.
Those prices play a far bigger role elsewhere, making up as much as 90% of household spending in Africa and 30% in China and other developing countries. It’s only 10% to 15% in the United States.
The U.N.’s Food and Agriculture Organization treported that world food prices have reached a record high, surpassing the food crisis of 2007. The FAO’s food basket of meat, sugar, diary and cereals was up 4% from November. But you can also find some profit in this pain: When a commodity’s price climbs, it generally signals an investment opportunity.
Want to get in on the booming market? One way to invest in it is to buy futures on the Chicago Board of Trade. But for small investors, futures often can be confusing and difficult to trade.
John Stephenson, an asset-management expert who has written a new guide called The Little Book of Commodity Investing, recommends other methods, including investing in exchange-traded funds. Unlike ETFs for gold and silver, agricultural ETFs don’t actually own the commodity, but instead buy futures contracts, saving investors the trouble.
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