Farmland Rush

Eight months ago, a farmer who signed a contract to sell corn got $3.75 a bushel. Today that same contract would pay $6.43. That’s a difference worth over $400 an acre for the average farm.

Farm incomes are up sharply. Last year they rose 37% after expenses. This year they may rise a similar amount. While the ag business has always had its ups and downs, this boom has been longer and stronger than most of those in the past.

Stock prices reflect this. Monsanto, Potash Corp, John Deere, and other agribusiness stocks have risen to internet-level p/e multiples. Private equity companies are investing in farmland and grain elevators. And former schoolteachers now advise farmers on futures trading.

The futures markets were invented in 1851 to help farmers manage the price they get for their crops. Let’s hope that when prices fall back again, America’s breadbasket won’t be set up for a sucker punch.

Douglas R. Tengdin, CFA
Chief Investment Officer
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By | 2014-09-03T19:16:29+00:00 June 12th, 2008|Global Market Update|0 Comments

About the Author:

Mr. Tengdin is the Chief Investment Officer at Charter Trust Company and author of “The Global Market Update”. The audio version of each post can be heard on radio stations throughout New England every weekday. Mr. Tengdin graduated from Dartmouth College, Magna Cum Laude. He received his Master of Arts from Trinity Divinity School, Magna Cum Laude and received his Chartered Financial Analyst (CFA) designation in 1992. Mr. Tengdin has been managing investment portfolios for over 30 years, working for Bank of Boston, State Street Global Advisors, Citibank – Tunisia, and Banknorth Group. Throughout his career, Mr. Tengdin has emphasized helping clients manage their financial risks in difficult environments where they can profit from investing in diverse assets in diverse settings. - Leave a comment if you have any questions—I read them all! - And Follow me on Twitter @GlobalMarketUpd

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