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By Steven Halpern, TheStockAdvisors.com |
Jan 03, 2010 |
 "The 2010 global recovery brings opportunity in agriculture commodities," says fund expert Doug Fabann. In The ETF Trader, he looks to DB Agriculture Double Long ETN (NYSE: DAG).
"Growing economies generally create greater discretionary spending for many of the world’s populations. "When there’s more money to go around, many families will elect to spend that additional hard-earned cash on obtaining better food. This is a common first step for creating a better lifestyle. "This trend, especially in emerging and frontier economies, along with falling production, will mean higher food prices around the world. "According to recent reports, farmers around the world have not planted enough grains due to the high cost of fertilizer. This will curtail the overall yield of their crops in 2010.
"In addition, the soft commodities have not experienced the same recovery that we have seen in energy and basic materials in 2009. Therefore, we think there is a big opportunity for profits by investing in the soft commodities in 2010. "Here's how to play that trend. Buy the double long leveraged exchange trade note DAG. Previously, we’ve had great success with the double long oil ETF in 2009, capturing great gains from the recovery in oil. I see a similar opportunity in DAG.
"This is a leveraged play, so realize that there is a higher degree of risk. Double long funds move twice their underlying index. DAG is invested 25% in corn, wheat, sugar and soybeans. "We would also mention that Powershares DB Agriculture (NYSE: DBA) is the unleveraged equivalent to DAG for those who want less risk. If the index of soft commodities goes up 20% DAG will advance 40%. Soft commodities are a good bet in 2010 ."
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