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Donnerstag, 27. September 2018

Buying Agribusiness Stocks While Agri Commodities are Down

I am not going to put much effort into writing a long post about this as I think only few people are interested in this area. I'm buying agricultural stocks because they have been in a sideways or down trend for years (except US agri stocks, which tended to move up with the broader market).

With oil price on the rise, agricultural commodity prices will follow sooner or later, because sugar (ethanol) and vegetable oil will increasingly be used so replace gasoline and diesel.

Many agri stocks and commodities prices peaked around 2014 when oil price (WTI) was above $100 per barrel. Oil companies stocks did too. And while many oil stocks recovered with rising oil, agri is still down. I expect that to change. I decided to pick the big asian players, because they are at extra bargain levels since US-China trade "war" makes news on a daily basis (which I expect to fade).

I'm buying Wilmar and China-Agri. (The latter is a spin off from China's state owned COFCO. I usually don't like buying state owned or affiliated stocks, but I make an exception for this one because it looks really cheap.)

I might short oil or oil companies' stocks as a hedge in the future, but I expect them to rise a little more until they peak again so I'm waiting.

I am long Wilmar International and China-Agri Industries.

Of course, everything I write is only my opinion and should not replace your own research. (It's not even a recommendation, it's only a documentation of and an explanation for my own trading.) I do not know the future either.

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