Agricultural commodities will be an attractive investment opportunity in 2010 while gold could suffer a correction after rallies to record highs this year, a hedge fund manager at Federated Investors said Nov. 4.
“A basket of agricultural commodities would seem sufficiently attractive as a long-term investment,” Steve Lehman, manager of the $1.48-billion Federated Market Opportunity Fund, said in an email reply to questions by Reuters. “There will likely be inexorable shortages of water and arable land for crops, combined with population growth and rising demands on agricultural products,” Lehman said.
Lehman acquired a reputation as a vocal bear at the height of the credit bubble, which began crashing in 2006 and led to the world’s worst financial crisis in 70 years. A global multi-asset allocation fund, Federated can move its holding between nearly any asset class, ranging from U. S. and international stock markets, currencies, commodities and cash.
Analysts believe China’s hot economy will show strong demand for copper and oil. China’s surging economy has shown robust demand for copper, oil and soybeans, but analysts are wondering if buying by Beijing goes into real demand or is for stockpiling purposes. The paucity of reliable data on stock levels has left investors guessing if China is really consuming the materials it imports. In the case of copper, the difficulty in securing data is compounded by the fact that it is much easier to buy and store the metal compared with crude oil and gasoline. Only a few nuggets of information are available.
For instance, China’s State Council said Monday the government would continue to stockpile the new harvest of corn and soybeans while raising the subsidies for wheat to help stabilize planting acreage.
The Council, which serves as the cabinet of the country, did not say at what prices the government will stockpile soybeans. With so much volatility in financial markets, Lehman said a buy-and-sell strategy is appropriate at this time, which would mean going long and short in various asset markets around the world.
“In a secular market decline that lasts a number of years… a buy-and-hold strategy was devastating” for investors, he said, adding a scheme to buy and then hold such assets is simply “not the way to go.”