It’s a sad fact that people have almost completely forgotten about investing in grain and agriculture. It’s all about the newest tech trend, the newest startup, the newest gadget. But grain has, quite literally, been here since the dawn of civilization. It’s pretty much the reasons civilization exists. And it is and has always been, a worthwhile and steady investment.
This is why we have taken the time to write up this short article about how to invest in grain. Read on to find out how to do it.
What makes it different?
Unlike regular investing in stocks and bonds, grain investment is a bit different. Here you need to take into account the needs and wants regarding food throughout the whole world. When you invest in a type of grain (wheat, soybean, corn…), you think about long-term population growth. You need to take into account how much food is needed around the world. You need to see where your country exports these products the most, and whether these target countries are growing or not.
Does your country provide subsidies for this specific type of grain you want to invest in? Keep your ear on the ground, and track government contracts and procurement strategies (or your broker can do that for you). Follow politics as well. The best possible option is noticing how, for example, you invested in wheat. Then, you see that your government improved relations significantly with a second country. This country is in dire need of wheat, and it has shown serious population growth (and in turn, food needs growth). Furthermore, this country grows soybeans and corn, but not wheat. Finally, you noticed your country has started making contracts with wheat producers. Here, obviously, wheat is the way to go.
However, the opposite can also happen. Let’s say you invested in soybeans. Suddenly, the crops are destroyed overnight, your country severed relations with its main export, and nobody really likes soybeans in your home country.
That’s what makes investing in grain so different. You need to track geopolitics and agriculture in order to be successful. Luckily, all this information is easy to find online.
Commodities and futures
Decide very soon whether you want to invest via futures contracts, or with an exchange-traded fund. The former will help you focus only on one grain type, while the latter will help you get exposure to multiple. Remember that if you want to do futures trading, that you need an account with a registered and certified futures broker. Exchange-traded funds require your standard brokerage account. You should also get an account with a registered futures broker as well.
Never be afraid to ask for quality assistance with grain sales. There are many dealerships and specialized companies that can give you some advice on this topic, and you can always ask your broker.
Now, remember that when you get a grain futures contract, you can get a trade done with a minimum margin deposit that ranges from five to ten percent of the actual value of the contract.
Speak with your broker and figure out what your actual trading goals are. A broker can help you out with setting up a good trading platform. Furthermore, he or she can show you exactly how to check prices, and how to place trades, in case your new to all of this.
Geopolitics and the world
At the moment of writing this article, you will notice that countries that are on the rise, like China and India, have an increase in beef and chicken consumption. This means they will need more grain to feed all these animals.
Next, water is getting a bit scarce in China which, while unfortunate for them, leaves a lot of room for more exporting of grains since it’s difficult for them to grow their own. Finally, the rise in biofuel (ethanol that comes from corn) will also make investing in grain a worthwhile investment.
There you have it, a quick and easy article on investing in grain. Investing in grain is a stable and secure way of making easy money. Sure, it does differ a bit when compared to your regular stocks and bonds, but that’s what makes it so interesting and exciting. Furthermore, since everybody is so focused on tech nowadays, the competition will be a bit weaker when compared to Silicon Valley nuts.