2008 food prices rising explanation

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“Why are food prices rising? What investment strategies could an equity fund manager use to profit from inflation in food prices?”

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2008 food prices rising explanation

  1. 1. Presentation “ Why are food prices rising? What investment strategies could an equity fund manager use to profit from inflation in food prices?” Matteo Santoro
  2. 2. Why are food prices rising? (1/4) <ul><li>Population </li></ul><ul><li>Growth in the world population  Higher demand for food </li></ul><ul><li>Energy </li></ul><ul><li>Higher energy cost  Increase in Biodiesel production  “food for oil” and “climate change” </li></ul><ul><li>Finance </li></ul><ul><li>Speculation in the financial markets for certain agricultural commodities </li></ul>
  3. 3. Why are food prices rising? (2/4) <ul><li>Population </li></ul><ul><li>Growth in the world population  Higher demand for food </li></ul>Source: Population Reference Bureau 2008
  4. 4. Why are food prices rising? (3/4) <ul><li>Energy </li></ul><ul><li>Higher energy cost  Increase in Biodiesel Production  “food for oil” and “climate change” </li></ul>
  5. 5. Why are food prices rising? (4/4) <ul><li>Finance </li></ul><ul><li>Speculation in the financial markets for certain agricultural commodities </li></ul>
  6. 6. Future contracts tables for wheat and rough rice Source: Bloomberg L.P. Source: Bloomberg L.P.
  7. 7. Wheat and Crude oil price trends Source: Bloomberg L.P.
  8. 8. Equity Fund Managers function… <ul><li>Rank high relatively to the their benchmark  they do not speculate </li></ul>
  9. 9. Strategies to profit from inflation in food prices <ul><li>Investment strategies: </li></ul><ul><li>Invest in industries that produce agricultural fertilizer and machineries for food harvesting </li></ul><ul><li>In the market: </li></ul><ul><li>Long position on: corn, rice, wheat, coffee, meat, etc. </li></ul><ul><li>Short position on “luxury” foods </li></ul>
  10. 10. Conclusion

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