How to invest in agricultural commodities?

Lachako

Hi all

I'm looking for any advice or information on how a regular Joe Soap such as myself can invest in agricultural commodities such as sugar, wheat etc. without having to go down the spread betting route.

Would the most accesible option be to invest in companies that are in these fields, which appear to be undervalued/good solid companies? Or will any potential gains in commodity prices not be refelected in individual company share prices, if the world markets continue to take a battering and all shares are kept depressed by more global factors?

Any advice or opinions welcome

Thanks

Lachako

soddy1979

Investing in companies involved in commodity production, won't fully track the commodity price, as these companies normally offset commodity price risk in the futures markets. Maybe a farmland REIT?

Lachako

Excuse my ignorance but what is an REIT?

soddy1979

Hi,

REIT stands for Real Estate Investment Trust. It is an entity that will hold pieces of real estate. It trades exactly like a share, on a stock exchange, may pay a dividend, etc.

Agricultural REITs may exhibit correlation to agricultural commodities. For example, an Agricultural REIT that invests in farmland that is used to produce wheat, should track the price of wheat to a certain extent.

Agricultural ETF's (exchange traded funds, again that trade like normal shares) may track the price of commodities better. They may be directly invested in futures, or swaps that are priced off an agricultural index. A few agricultural ETF's can be found here.

http://seekingalpha.com/article/64802-which-of-the-6-agriculture-etfs-is-best

Lachako

Thanks for that Soddy