Themes: Agricultural Commodities, Trend Investments
The price of coffee has shot-up by 14.5% over the last month. Cocoa is up by 9%. And palm oil… that’s up by 10%.
Agricultural commodities have suddenly become the place for investors to be. Because the gains in these markets could just be beginning. And what’s driving this sudden feeding frenzy is the weather.
The dreaded El Niño weather phenomenon is back. And it is already turning the weather in the tropics upside down.
That opens-up a chance for you to make some easy profits. Because there is a very real chance that production of certain crops is going to be hit badly, sending their prices soaring.
And as those fears grow, speculators have poured in. For most investors, El Niño’s arrival is hot news. The Australian Weather Bureau only confirmed its arrival three weeks ago.
But we are well ahead of the crowd. You see, I’ve been tracking the formation of El Niño since April. That’s when the first reports reached me from Indonesia about early signs of an El Niño beginning to form.
That’s when I started work on a report to show how you can make real money out of this bad weather. You can download that report here.
El Niño is already turning
El Niño isn’t just some bogyman. Its impact on global agriculture is very real. It can bring torrential rain where it isn’t expected and drought to some of the wettest places on earth. And there are clear signs that this is already happening. The net effect of that could be to send agricultural prices sharply higher over the next couple of months.
In India the monsoon rains have fallen far short of expectation this year. In some parts of the country, the amount of rain is two-thirds lower than expected this year. That’s bad news because India depends on the monsoon to irrigate two-thirds of its agricultural land. When a country with 1.2 billion people isn’t producing the food that it needs and has to start buying it on the international markets, prices start to move. So you can see why speculators are getting so excited about food prices. And now the meteorologists are warnings that this year’s El Niño could bring drought to Australia and Indonesia.
In Latin America, it is causing the opposite problem – far too much rain. In southern Brazil it has rained so hard that farmers can’t get their harvesting machinery into the fields because the mud is now so thick. That is set to drive crop prices sharply higher. Brazil is the world’s third-biggest agricultural exporter.
Two commodities to watch
The price of coffee should do well out of this. Both Brazil and Indonesia are major coffee producers. During the last major El Niño in 1997, the price of coffee jumped by a whopping 115% in just six months. You can bet on the price of coffee rising through the ETFS Coffee Fund (ticker: COFF). That’s an obvious place to start.
It isn’t just agricultural commodities that are at risk either. In 1997, El Niño set-off torrential rains in South America. Copper mines in Chile and Peru got flooded. Chile is the world’s biggest copper producer. So that hit global supplies hard. Copper is definitely one commodity to watch this time as well. Its price has risen by 88% since the start of the year because of rising demand from China. A simple way to profit from any disruption to production is through the ETFS Copper Fund (ticker: COPA). It tracks the price of copper futures.
So the investment opportunities in the commodities markets are huge right now. But I really do want to stress a key point. Not every commodity is going to be a money spinner – not every crop either. The critical factor in making big gains from commodities during an El Niño is to understand the supply and demand situation with them. The bigger the supply and demand imbalance it already faces, the bigger the gain is going to be if El Niño hits production. So you have to have a clear idea of which crops are going to be affected.
That’s why I don’t believe that the biggest profits for investors are going to come from coffee or copper during this El Niño. As I said, I’ve been looking for the best way to profit from El Niño for months now. And I’m convinced that the biggest gains are going to come from another commodity that rarely gets any attention. You will find all the details in my new report.
Living in our air-conditioned cocoons, it’s easy to forget how much influence the weather actually has over the global economy. But as we are already beginning to see, bad weather in the tropics this year. A major El Niño event only happens about once every ten years. So you aren’t going to have ton act quickly to make the biggest gains.
When Mother Nature gives you a profit opportunity like this there’s only one smart thing to do: grab it with both hands.
Good investing,
Manraaj Singh
For The Right Side
Past performance and forecasts are not a reliable indicator of future results. Your capital is at risk when you invest in shares; never risk more than you can afford to lose. Please seek independent financial advice if necessary.
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