Rising Oil Prices Helping Ag Stocks?

This article originally appeared on Traders Reserve . By John Thomas   You would think that with crude oil prices over $100 per barrel and gasoline continuing its relentless march toward $5 per gallon, farmers would be worried about how to afford the fuel for their machinery. But that’s not the case.  The burgeoning demand for energy has spilled over to the corn market, where demand for feedstock by ethanol refiners is going from strong to stronger. Nearly 40% of the country’s corn crop is being diverted to ethanol production. Margins at the big ethanol producers, like Archer Daniels Midland (NYSE: ADM ), once nonexistent, are now widening rapidly. I have been a huge “full-on” the whole food complex since I put out my watershed piece out last May, “Going Back Into the Ags.” Now that we are into the planting season, you might expect the volatility of food prices generally to increase. There are still drought conditions in many of the world’s major producing areas. Stockpiles are near record lows. Much of the unrest in the Middle East is over rapidly rising food prices, where they are huge importers. Notice that once the S&P 500 bounced, the first area that traders poured back into was the agriculture sector and exchange-traded funds (ETFs) like PowerShares DB Agriculture Fund (NYSE: DBA ) as fast as they could. I think we are one year into a decade-long bull market for food, and that investors should be buying every substantial dip in the sector.  Flight of the Black Swans: The 3 coming market crashes that will wipe you out or make you rich. Watch this free webinar. For more trades, ideas and strategies, visit Traders Reserve .
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