Grain prices generally continued their upward rallies, as the worst drought since 1956 persists in adversely impacting crop conditions. This drought has not been alone in its devastation, as dry weather in Russia and Eastern Europe continues as well. Soybeans have experienced an upsurge of almost 45% this year, touching a record-high level of $17.71/bushel on the Chicago Board of Trade (CBOT) yesterday. Corn is also hovering above $8/bushel and touched a record high of $8.49 on August 10. In such a scenario, we have developed a trading strategy to play the future movements of three main agricultural commodities that are impacted by the drought the most - corn, soybeans and wheat. Our portfolio suggests long positions in selective stocks of fertilizers, seeds, machinery and grain ETFs, while short positions in crop insurers, meat producers and ethanol makers.
Reference URL: http://seekingalpha.com/article/840491-a-non-farmer-s-agri-portfolio