Biofuels are fine -- but people still have to eat. Two analysts joined "Morning Call" to discuss investing in commodities through traditional as well as trendy strategies.
Sara Nunnally, the Taipan Group's senior investment analyst and an editor at Material Profits newsletter, is closely watching agri-business for the next three to six months. She cautioned would-be investors to be more selective than in recent years, saying they "can't just throw a dart" at random names and expect easy profits.
While she sees alternative ways to beat the corn frenzy -- e.g., smaller ethanol producers -- Nunnally likes soybeans. She said diets are becoming "more complex" around the world, and soy is holding down a bigger portion of the dinner table. She also noted precious metals as a play.
Jim Steel, chief commodities analyst at HSBC, agreed -- though mostly about the precious metals. He cited a possible "forestall of rate cuts" and long-term "fragility" in the U.S. dollar -- as well as rising consumer demand in Asia. He pointed specifically to platinum and gold, praising the latter both as a counterweight to dollar weakness as well as a play on stronger discretionary buys of jewelry.