While many are still arguing whether a bull or bear stock market is ahead, whether euro bond is the only solution of Europe crisis. The much overlooked agriculture commodity market is quietly shooting up to a new level.
Let’s take a look at the S&P GSCI® Agriculture Index which provides investors with a reliable benchmark for investment performance in the agricultural commodity markets. As of December 30, 2011, it consists of agriculture commodities shown in the chart on the left.
If you have been following my blog, in Sep 2010, when agriculture commodity markets were still relatively quiet, I was advocating using agriculture commodity to diversify the portfolio. True enough, global food-price index hit record high in early 2011, and many of my clients have made decent returns.
I still remember vividly that at the time, many new “agriculture funds” were launched. The bullish future of agriculture commodity were reported in newspaper every week just before the markets crashed and many investors were stuck in the funds since then. (you can refer to the chart below for historical performance of the agriculture index).
Ironically, I rarely see this kind of reports on this lately when the market rallied more than 20% in weeks, neither does any fund manager talk about it. Everybody is talking about Europe debt crisis but the stock market never went to the way it was “supposed” to.
When next time you start to see interviews of grand future of agriculture commodity market, you should know what to expect.