"Agri-Foods Thoughts" by Ned Schmidt. FSO Editorial 08/06/2008

FSO Editorials

AGRI-FOOD THOUGHTS
by Ned W. Schmidt, CFA, CEBS
Schmidt Management Company
August 6, 2008

Agri-Foods

With paper oil prices breaking, nonsense spewing forth from business media and strategists has expanded. Commodity prices have broken, many claim. Yes folks, those billion plus consumers in China stopped eating food the day paper oil prices peaked. We would not be surprised if they do keep eating. Slowdown in China? A possibility, and irrelevant for investment decisions. Imagine selling U.S. equities in1901 due to fear U.S. may have an economic slowdown sometime. That is today's equivalent of ignoring long-term impact of China and India. Chinese consumers are going dominate the world economy for next 25-75 years. And we suspect, they will keep eating in all of those years.

wheat - cash

This week's chart is of U.S. wheat prices. Run from $10 to the high was shortage induced. That situation was corrected, though world continues long-term short Agri-Food. About three fourths of North American 2008 wheat crop has been harvested. Spring wheat remains in the ground. That defines North American wheat supply till 2009. Paper oil prices could go to $2, and not one more grain of wheat will be produced till 2009 than already exists in bins or in ground. Wheat prices are deeply over sold due to normal seasonal influence of other grains being grown. Seasonal factors combined with bursting of paper oil mania are creating short-term pressure on Agri-Food commodity prices and investments. Combination of these events is likely creating an important low in Agri-Food commodity and stock prices. A rare opportunity exists to harvest some attractively priced Agri-Food investments which should provide excellent future returns, assuming Chinese consumers continue to eat.

AGRI-FOOD THOUGHTS are from Ned W. Schmidt,CFA,CEBS, publisher of Agri-Food Value View, a monthly exploration of the Agri-Food grand cycle being created by China, India, and Eco-energy. To review a recent issue write to agrifoodvalueview@earthlink.net. Ned will be exploring the Agri-Food cycle at The Wealth Expo in NYC, 19-21 October. For information go to www.wealthexpo.net

Please remember that no method is perfect nor is the one running the model.
All estimated returns are for the model portfolio and do not reflect those earned on actual portfolios.