The global food market has been growing continuously for almost two years now. The reason, of course, is the pandemic, which has The global food market has been growing continuously for almost two years now. The reason, of course, is the pandemic, which has disrupted supply chains and encouraged stockpiling. As a result, the FAO Food Price Index in November 2021 was 27.3% higher than in November 2020. The growth leaders are oilseeds. Grain does not lag behind according to a wheat price forecast. For example, wheat has risen in price to a record level for 10 years.
Reasons to invest in wheat
The expert believes that investing in agriculture is always the right strategic move for investors. Regardless of whether the economy is in recession or on the rise, people need to eat. That is why investments in agriculture are considered recession-resistant. In addition, of course, as the population on the Earth grows, we see that agriculture plays a key role.
The trend of the wheat will continue, because this autumn, against the backdrop of the gas crisis in Europe, prices for fertilizers jumped sharply. This means that the 2022 planting season will cost farmers twice as much as last season. Compensate for the increase in production costs will have to increase the prices of final products.
On the one hand, what is happening raises concerns about food security. On the other hand, it opens up opportunities for profitable investments.
Details about these investments
Such an instrument as exchange-traded funds or ETF belongs to one of the most reliable options. They diversify positions by investing in many companies in different branches of agriculture. Moreover, you can choose the shares of the fund whose position you find more profitable and more reliable.
Similarly, you can invest in a mutual fund, which is the product of a large investment bank, or a large asset management company. In this case, the retail investor is also provided with transparency and protection against fraud.
At the same time, there is an investment tool as futures. Although associated with high risks, it is quite suitable for a competent specialist in the agricultural business. The latter can calculate these risks and make good money.
Therefore, for those who want to get the maximum profit from rising prices for a particular type of agricultural product like wheat, the expert advises investing in futures:
- This option is suitable for a more advanced investor who analyzes the market and can predict where it will move in the future.
- You can also trade futures contracts on the stock exchange through a broker.
- You can give an order to buy and sell futures for a specific asset – contracts for the supply of wheat.
- There are additional risks, but the profit can be much greater. This option is suitable for an investor who wants not to hedge but to earn money.
In conclusion, we note that at the moment, wheat on world markets continues to rise in price. This trend has high chances to continue and that is why it is high time to learn more about these investments and include them in your portfolio.