The Crops Industry has gained 40% market capitalization in the 12 months ended July 2008. However, it has also lost 4% during the last 30 days. This could be an optimal time to exit the farm part of the economy, and move on to industries with better prospects.
The Crops Industry is part of the Consumer: Non-Cyclical Sector. That does not mean that the supply side is stable. Inclement weather in important grain-producing areas of the world, and shifts to bio-fuels has dominated trading in early 2008. However, it only takes about 100 days to harvest new crops. That is why the world could be on the verge of a new cycle in farm production.
It started with India at the beginning of the second quarter of calendar 2008. The farmers of this populous nation weighed in with a record wheat output. The New Delhi government procured all the grain and banned exports to other countries. A market of one billion hungry mouths was effectively isolated. The Indian government has followed this with intransigence on tariff barrier issues at the July 2008 World Trade Organization talks. This is an additional setback for world grain traders.
Now China has reported record farm production. The country is not self-sufficient in grains, but it is evident that its purchases from other countries will fall. A third of all people on the planet live in India and China. This is why the July 2008 trend of falling market capitalization in the Crops Industry appears set to continue.
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