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Soybeans poised to make investors rich in 2007, analyst says

Agriculture.com Staff 01/03/2007 @ 1:37pm

As the commodities bull market rolls into 2007, fund managers and private investors are scrambling to pick the next under-priced natural resource. Commodities analyst Kevin Kerr says soybeans could be the new year's next great agricultural trade.

"Soybean prices could double this year," says Kerr. "Increasing pressure on ethanol-producing corn industries could easily put enough strain on soybean acreage to drive prices up."

As the second largest agricultural commodity in the U.S. and the chief ingredient in much of the nation's cooking oils and animal feed, any change in soybean supply is sure to alter its trading value.

"Bean buyers have already started amassing contracts," Kerr recently wrote in his commodities newsletter Resource Trader Alert. "If farmers opt to grow corn for the obvious, immediate ethanol profits, soybean production will drop and prices could soar."

According to recent surveys, U.S. farmers have already begun to sow the smallest soybean crop since 1996.

Soybean production, a $16.9 billion industry, sat on the sidelines in 2006 as other grain futures saw dramatic gains. Corn prices shot up 82% over the past year along with wheat's 52% rise. Compared to the S&P 500's anemic 13% gain in 2006, Kerr believes that "Fund managers will diversify assets out of stocks and bonds next year, gambling that grains and other agricultural products will pay off big like they did for us last year."

Soybeans, corn and wheat all reached three-week highs in Chicago last week on expectations that pension funds and other investors will spend more on agricultural commodities in 2007. According to Kerr, this may be just the beginning of a long run for soybeans.

As the commodities bull market rolls into 2007, fund managers and private investors are scrambling to pick the next under-priced natural resource. Commodities analyst Kevin Kerr says soybeans could be the new year's next great agricultural trade.

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