Spotting an Ag Opportunity

Published on
August 9th, 2018
Duration
10 minutes

Spotting an Ag Opportunity

Trade Ideas ·
Featuring Shawn Hackett

Published on: August 9th, 2018 • Duration: 10 minutes

Shawn Hackett, president of Hackett Financial Advisors, discusses his bullish thesis on agriculture. He explains the weather-related catalysts powering the trade higher in this interview with Justine Underhill. Filmed on August 2, 2018.

Comments

  • DC
    Dan C.
    30 August 2018 @ 21:06
    Great piece Shawn. We have also been looking at an ags position. I like to trade in and out of $LGRA x2 Lev Grains ETF. We use DeMark Sequential to time entries and exits. Long term I think Ags are a solid play. Of concern is another Arab Spring type event as it was food shortages that kicked off that event across N Africa and the M East. If we are correct about lower crop yields then this chimes with Fourth Turning thesis of huge societal change by 2030. The Winter started in 2008. GMO have released an excellent thought provoking piece too this month on the destruction of soil across the globe. We lose about 1% pa currently and we only have 30-70 years of crop growing soil left at best. Mr Grantham says drastic action is required as population growth is also predicted such that 11bn souls will be on Earth by 2100. The Race for Survival. I commend this piece to everyone
  • bm
    brian m.
    26 August 2018 @ 07:47
    This is interesting..The dramatic drops in Agricultural prices in the 70s early 90s and 2000 do coincide with the peaks in the sunspots
  • SB
    Stephen B.
    13 August 2018 @ 00:32
    Shawn is spot on but was careful not to specifically ridicule the man made global warming / CO2 thesis. I don't have his constraints so, for the record, i would add that i believe the thesis is wrong. I first became suspicious when i learnt that: (i) the IPCC sponsored climate change models exclude both the effects of geothermal activity and sun spot activity (why, you might ask??); (ii) neighboring planets are experiencing even more disruptive changes (our magnetosphere protects us to some degree). From that, i went onto learn about the "electric universe theory", which explains that the sun responds to cyclical changes in the plasma streams (it receives from the wider universe) and that planet earth, in turn, responds to our local space weather. Moreover, the historical/geological evidence clearly suggests that major changes (like the ice ages) are linked to space weather events. I appreciate that this sort of discussion probably does not belong within a financial web site but only to say that I believe that Shawn is to be applauded for taking this mainstream.
  • SB
    Stephen B.
    13 August 2018 @ 00:04
    Oddly enough, i have been also following the solar cycle also, for some time. I believe this is going to be a big deal for agriculture companies but it is hard to figure out the winners and the losers (from an investment thesis). What Shawn didn't specifically state is that while there will be unpredictable outcomes (as the weather pattern is a complex system - the butterfly theory) the overall trend will be one of significant cooling. The growing season in the northern prairies, for instance, may become significantly shorter, drastically cutting yields. For that reason would have liked to invest in Mexico agriculture but there are no good publicly owned land owning companies (just food processors). Most of the US listed agricultural companies are spread across multiple segments and multiple states/countries, so it would take a lot to figure out if they are a net winner or loser. I had got as far as identifying the global fertilizer companies as potential winners, as this will inevitably mean a big increase in demand but that is not a perfect answer as the industry does have some overcapacity. In many ways this recommendation makes better sense, as it purely tracks agriculture commodity futures.
  • MU
    Mo U.
    10 August 2018 @ 04:28
    Why would you recommend RJA over DBA? DBA seems to be more liquid. I'd be interested in your thoughts.
    • YJ
      Yaokai J.
      18 August 2018 @ 08:00
      RJA is 10 bps cheaper lol
  • DF
    Daniel F.
    10 August 2018 @ 00:10
    Lower AG yields could push up demand for fertilizers as well
  • PG
    Philippe G.
    9 August 2018 @ 21:51
    Excellent. Appreciated the new analysis approach.
  • JE
    James E.
    9 August 2018 @ 20:50
    Finally someone with the fortitude to inform RV viewers and hopefully other people on the main driver of climate on this planet, the Sun. Thank you Shawn, very informative analysis, the problem here is the cycle low in solar wind is only beginning. Oil, and Nat. Gas could trade anywhere from here, and as for food supplies, shortages are a given. Very concerning for poor countries and the less well off in society.
    • SH
      Steve H.
      9 August 2018 @ 21:10
      I agree. Regretably, the Climate Change 'Taliban' consider this sort of stuff to be heresy.
    • WM
      Will M.
      18 August 2018 @ 20:05
      Martin Armstong is a big proponent of the global cooling and sunspot minimum impacts. Worth checking out his climate modeling perspectives at Armstrong economics.
  • JP
    John P.
    9 August 2018 @ 20:02
    I like the bullish agriculture trade idea, but I'm nut sure about holding RJA for over a year. It has a much higher assets under management, but the rebalancing occurs monthly. There are others such as JJGB and GRU that rebalance differently, and the decay effect can be seen compared to historical prices. I get doing this for 2-6 months, but I'm not sure about longer. I'm new to futures, am I missing something?
    • YB
      Yuriy B.
      10 August 2018 @ 10:08
      John, I don't personally trade futures, but it seems to my caveman eye that you make a great point. Looking at GRU and JJGB, it looks like GRU buys "front month futures contracts" (just as I believe RJA does). Whereas JJGB buys 1-5 month contracts, which I believe should be a little more inflation-proof. Thoughts?
  • DD
    Daniel D.
    9 August 2018 @ 15:33
    Thanks Shawn. Very clear, concise and well thought out.