DUSSELDORF. Bad news for the sweet tooth: candy will be more expensive. Traders expect the purchase "significantly higher price volatility", which should be passed on to consumers, "says the chief executive of the HDE retail trade association, Stefan Genth. The reason: Some agricultural commodities in the past year laid out a brilliant rally.
And this is also true, the producers of delicacies. Prepare the industry concerns especially the sharp increase in price for the main raw cocoa, "says the vice-chairman of the Federation of German confectionery industry Tobias Bachmüller. While a sweet tooth have to dig deeper into their pockets, investors can benefit from the rising prices, which have a stock quote for "pleasure-resources" splendidly developed.
Sugar has risen in the past year, almost 120 per cent, cocoa has doubled since 2007. The rally could continue. "For sugar, the characters continue to stand on green," said Eugen Weinberg, commodities expert at the Commerzbank. "There might be a small correction, but then the prices continue to rise." The robust demand and massive problems in the production would speak for sugar. While there are certainly signs of a shortage of supply, the major supplier to the enormous demand can not operate and some will not even meet the domestic demand.
For example, India has become, after a drought period, the second largest exporter, the largest importer. "Since sugar is very high in calories, he just heard in the poor countries to the main food substances – that makes him his political commodity," says Weinberg. His conclusion: "Sugar is very attractive." Less optimistic is Manfred Wolter, commodities expert at Landesbank Baden-Wurttemberg (LBBW). "Still running the rally, but we’ve at least for the majority of the Softs rally behind us," he says. "In sugar we do not currently need to invest anew." The last two years were marked by special factors. In India the monsoon in 2008 has brought little rain, was killed in 2009 in Brazil, however much precipitation.
Both had scarce supply. But now would be to normalize the situation, the price of sugar faced a consolidation. "Even if prices rise even in the short term, investors should watch the market closely and get off at times." In a repeat performance from last year, he does not believe.
With new commitments would prefer Wolter cocoa. But cocoa has already gone well and so expensive in decades more. "Finally in 1979 it cost as much as now," says Weinberg. Many analysts expect that demand will increase with the expected economic recovery continues – and with it the price of the commodity. This applies in principle to the prices of cereals. But at times of overproduction can tumble or pass to the quotations on the spot. A phenomenon that is currently observed in wheat. "We have two very good wheat years behind us," says LBBW analyst Wolter. "The harvest was fantastic, we are more than well supplied, the camps are full." For investors, this means that fundamentally little potential. Also Carsten Fritsch, an expert on agricultural commodities in the CommerzbankNot being advised to become involved. "Short-term investors should keep away from wheat for the next three to six months, expectations are subdued," he says.
In the long term, however, wheat prices are likely to rise again, the growing world population, consume more and more emerging markets. Sees potential CommerzbankExpert Fritsch in maize. "The consumption is high and the demand is more stable than for wheat because corn is not only used as food and feed but also for the production of fuels," he says. Even now, would be used in the United States one third of the maize harvest for bioethanol production. Also, competition for corn is lower than for other commodities – and this brings opportunities for investors.
The biggest player in the wheat market is the USA. The U.S. Department of Agriculture estimates that this year 334 million tons of corn are harvested on American fields. The number two in China is only 155 million tons. Another difference Export: The Chinese hardly maize, while 60 percent of world exports (come around 53 million tonnes) from the U.S.. Neither wheat nor corn last year, investors could earn a lot – on the contrary. Soya came to a standstill. The recovery of raw material passes its agricultural sector, in part, "The catch-up compared to other commodity classes is great," says Fritsch.
Agricultural commodities for many experts a mega trend. In the long term will increase the demand. "Still, the production keeps pace," said Wolter. "With the surplus we have in some cases even a luxury problem." But the earth’s surface is limited. "The question is how long we make it, with new irrigation systems, machinery and fertilizer to keep the growing demand for state," admits the LBBW bear expert. Even seed and fertilizer producers and harvesters manufacturers could benefit the long term. Therefore, some experts recommend to spread risk across the entire value chain.
While investors are using ETFs for several agricultural commodities or companies, they can invest specifically with ETCs in individual commodities. Experts advise retail investors to be widespread and long-term commitment. "In term of ten years, the prospects are excellent, sight of one or two years, but they are quite uncertain," says Weinberg. Above all, the weather is a key issue. Sunshine and rainfall are important factors for the harvest, which can be difficult to predict. And with each harvest of the "cycle is" going again. "At least once a year to be reshuffled," said Wolter.