With soft commodity prices riding high, governments from Argentina to China want a piece of the action. Taxes on soybeans and wheat have jumped, prompting Argentina’s farmers to take to the streets of Buenos Aires in protest.
Food prices are now near the top of the global political agenda, due to price surges caused by rising incomes, population growth and biofuel demand for key crops. Those factors all point to a bull run that has a lot further to go, says George Lee, manager of the CF Eclectica Agriculture Fund.
Mark Dampier of Hargreaves Lansdown says in The Guardian: “There is evidence of food shortages in countries like China, India and Japan, and farmers are working hard to meet the demand with this fund positioned to benefit.”
Investing in firms that produce and process softs, such as wheat, rather than in the commodities themselves, the fund is up 22% since being launched last June. But we’re nowhere near bubble territory yet, Lee tells Fund Strategy. “People get very excited because the wheat price has gone up a bit, but it is probably going to go up two or three times more.”
Lee points to the fact that some commodities, such as oil, have soared ten times in value over a period when corn has only doubled. That’s why he’s betting big on fertiliser stocks, such as Potash Corp and Agrium inc.
In short: “George Lee’s case for soft commodities is convincing and I have already added this fund to my holdings,” says Darius McDermott of Chelsea Financial Services in the Daily Mail.
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CF Eclectica Agriculture Fund top ten holdings
Name of holding, % of assets
Lindsay Corp (UN*), +3.4
Agrium Inc (CT*), +3.4
Archer-Daniels-Midland Co (UN*), +3.3
AGCO Corp (UN*), +3.2
Potash Corp of Saskatchewan (CT*), +3.2
CF Industries Holdings Inc (UN*), +3.1
Monsanto Co (UN*), +3.1
Mosaic Co/The (UN*), +2.9
Syngenta AG (VX*), +2.9
Yara International ASA (NO*), +2.8