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Dennis Gartman: Food Supply Has Just Been Materially Reduced

Wednesday, 12 Jan 2011 | 6:23 PM ET

You probably know about the latest USDA report; it showed America’s grain stockpiles were at their lowest levels in years.

The news sent corn and soybeans to limit up on Wednesday. But do you about what’s happening overseas and how it’s driving prices, too?

Australia's unprecedented floods continue to devastate the country leaving an area larger than France and Germany combined under water. And that includes key farmland.

As a result, ”The winter wheat crop in Australia has been absolutely destroyed,” explains strategic investor Dennis Gartman and author of The Gartman Letter.

He goes on to say there’s no way to replant in time for this harvest. “There’s now demonstrably less wheat available to the world – because of what’s happened.”

That upsets the balance of supply and demand which means prices are likely going higher. “The world needs food and food supply has now been materially reduced,” he says.

Because most retail investors don’t trade futures contracts, Fast Money host Melissa Lee asks Gartman for some ETF suggestion.

The Ag Trade
Commodities are rising from demand, not speculation, says Dennis Gartman, The Gartman Letter.



”MOO , is good, RJA is good,” he replies. ”There are so many now that are grain oriented and soft oriented. Pick one and use it, I think they’re going higher.”

Or if you’re looking for a derivative trade, “Take a look at Mosaic, Potash, or Agrium; all are moving from the lower left to the upper right,” Gartman says.

Fast trader Guy Adami has another suggestions. “Given what Gartman is talking about Deere may be reasonable,” he says.



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Trader disclosure: On January 12, 2010, following stocks and commodities mentioned or intended to be mentioned on CNBC’s "Fast Money" were owned by the "Fast Money" traders; Terranova owns (GM); Terranova owns (C); Terranova owns (VRTS); Terranova owns (UPL); Terranova owns (PEP); Terranova owns (OXY); Terranova owns (GS); Terranova owns (LTD); Terranova owns (CNQ); Terranova owns (PVH); Terranova owns (CVI); Terranova owns (GLD) puts; Adami owns (AGU); Adami owns (C); Adami owns (BTU); Adami owns (GS); Adami owns (INTC); Adami owns (MSFT); Adami owns (NUE); Adami's wife works at (MRK); Finerman's firm is short (MDY); Finerman's firm is short (SPY); Finerman's firm is short (IWM); Finerman's firm is long S&P puts; Finerman's firm is long Russell 2000 puts; Finerman owns (AAPL); Finerman owns (BAC); Finerman's firm owns (BBY); Finerman owns (BP); Finerman's firm owns (BP); Finerman's owns (GOOG); Finerman owns (HPQ); Finerman's firm owns (HPQ); Finerman's firm owns (IBM); Finerman owns (JPM) and (JPM) leaps; Finerman's firm owns (JPM) and (JPM) leaps; Finerman owns (MSFT); Finerman's firm owns (MSFT); Finerman's firm owns (TGT); Finerman's firm owns (WMT)

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