erryl:

Most commodities that have had an ETF created to allow easy ownership of a commodity have seen the price of that commodity increase.

I'm with you so far...

I think that the failure of the first generation of biofuels will have a big impact on ag prices.... with the emerging corn crisis brought on by flooding in the midwest and a deep pocketed gasohol industry that I think will soon go belly up (because faced with hunger or gasohol the choice is pretty easy).  This should dramaticly change the ag commodity picture. 

Let's not get causes and effects reversed. The biofuel demand drove prices up; that's exactly what proved that corn-based fuel is not economically sustainable. (I don't know why policymakers could not have predicted that, but here we are). But with the flood damage and increased demand from a variety of other factors, I don't see the price of corn returning to pre-ethanol levels just because the ethanol industry is in disarray.

 

I don't think that I want to invest in anything that is not sustainable over the long term... and these high grain prices aren't.  It isn't so much that the price can't be sustained as it is that the demand cannot be met at any price.  Once you have to import it... what sense does gasohol make then?  You can import oil or grain, what's the difference?  I guess there is a difference... grain is renewable, but energy independence is an urgent problem, too... as is the trade deficit.

I think I will just stick with energy and mining for now... ag was a brilliant move a year ago... I don't think so now, because the headlights are approaching.  A collision is inevitable unless we change course.  Hopefully, we are smart enough to do it before the train wrecks.

Here I completely perplexed by your reasoning. Commodity prices are global, not national, so--if I'm not mistaken-- it doesn't matter who is importing or exporting. If the "demand cannot be met at any price" then how can the price collapse? I can see price corrections in the big run-up, but I don't see how the trend can change. If I've missed your point, please help me understand.

--Aalan