American farmers are poised to enjoy one of the greatest years ever for American agriculture as wheat prices skyrocket in the wake of Russia’s drought, according to Dennis Gartman, economist and editor of the Gartman Letter.
Wheat rallied to the highest price in 23 months after Russia, the world’s third-biggest grower, banned exports of the crop following the country’s worst drought in at least a half- century. Prices for wheat have climbed 17 percent this month, on top of a 38 percent surge last month.
The U.S. has the world’s only abundant source of grain in deliverable locations, Gartman said today in a radio interview with Tom Keene on “Bloomberg Surveillance.” A heat wave in Russia, dry weather in Kazakhstan, Ukraine and the European Union, and flooding in Canada ruined crops.
“You have a situation unlike anything that I’ve seen in the 35 years I’ve been trading in the grain markets,” Gartman, 59, said. “This is going to be one of the great years for American agriculture probably in history. Let’s not mince words here.”
Wheat for December delivery rose 54 cents to $8.0925 a bushel as of 11:46 a.m. on the Chicago Board of Trade, the highest since September 2008.
Gartman, who began his career as an economist for Cotton Inc. in the early 1970s, said wheat’s rally will also boost other crops, including rice, corn and soybeans, as consumers seek alternatives.
Windy City
“You can almost hear the drumbeat in Chicago,” the Suffolk, Virginia-based economist said. “This is not just wheat that is going higher. It’s pulling the entire agriculture commodity markets along with it.”
Companies, particularly in U.S. Midwestern states that support the agriculture industry, are also poised to benefit as farmers spend more money on livestock feed, machinery and retail goods, Gartman said. He recommended buying shares of farm equipment manufacturer Deere & Co., fertilizer producers and local Midwestern banks, which will gain from better loans.
Beer brewers, restaurant companies and livestock producers may be hurt by increasing commodity prices, he said.
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