New York, New York (PressExposure) March 12, 2012 -- Sasha Cekerevac, co-editor for Penny Stock Detectives, believes that the bizarre weather patterns we will continue to experience around the world will lead to supply disruptions in agricultural commodities.In a recent Penny Stock Detectives article, Cekerevac says that significant supply disruptions will lead to higher agricultural commodity prices, translating to higher food costs on the average person's plate.
Cekerevac points to recent news reports of dry weather conditions in South America, which are likely to reduce the amount of soybean crops the country will be able to grow. Brazil is also reportedly producing fewer soybeans, at 68 million metric tons versus United States Department of Agriculture (USDA) estimates of 72 million metric tons due to drier conditions than normal.
As reported in Cekerevac's Penny Stock Detectives article, German-based research firm Oil World predicts that the soybean harvest this crop year will fall by the biggest amount ever. It forecasts that 19 million metric tons less of soybeans will be produced, which is a huge amount. Demand in agricultural commodities is certainly not going to be reduced by anything near that level.
"This decrease in the supply of agricultural commodities will put more pressure on U.S.-based farmers to increase production and make up the shortfall," comments Cekerevac. "Soybean prices are now at five-month highs. This high level of price will ensure farmers use every advantage they can to produce the highest amount of agricultural commodities per acre of land and look for increased use of advanced seeds and fertilizer products."
As an investor, one way to play this trend is by looking at companies that produce advancements in seed technology. One such firm that is an interesting play is Origin Agritech, which specializes in developing new and stronger seeds. Cekerevac notes that the fewer seeds destroyed in the ground, the better the return on investment for a farmer. The company is working on several agricultural commodities seeds like corn, rice, cotton, and canola.
"Since fertilizer helps increase crop yields," comments Cekerevac, "fertilizer companies should continue to benefit directly from the supply disruptions."
According to Cekerevac, one company that investors might want to look at is Migao Corporation. The company manufactures fertilizer products in China, which itself a huge market for all agricultural commodities. Migao further trades at a very reasonable forward price/earnings ratio of 5.80.
The editor believes that there are many ways to profit from supply disruptions in agricultural commodities. Fertilizer companies and seed technology are just a few. There is no question, according to Cekerevac, that we are experiencing an agricultural commodities boom.
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