Agricultural commodities like corn and wheat are always considered as solid assets that one can invest in. What are the primary things that are specific about agricultural assets that a person needs to consider and evaluate before investing their money on them?
What are the things to consider before investing in agricultural crops as solid assets?
- Thread starter Kross
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You would have to take into consideration the weather elements and how it would affect the yield of particular crops before investing in them.
For one to be successful in the agricultural venture, the farmers should select the right type of soils, climatic conditions that matches with the type of crops being grown.
Like every other investment, one must consider the utility of agricultural products before investing in it because it would drive demand.
I think you need to consider the knowledge and skills you have to run things to perfection and make a success of it
For me, it is always confusing how to invest in agricultural crops as publicly traded investment options. I avoid it altogether.
eLdavis
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Before investing, find out the advantages and the disadvantages. This would help you decide if the investment is ment for you or not.
In this regard, i think technical analysis will be of utmost importance. Check the statistics and know how the crop have been performing since last few years like 5 years ago and take the average. If the average is below 50%, you better say away. Secondly, remember that climate and environmental factors can still play a major role.
Weather conditions, diseases and fluctuation in market demand, prices are the main risks of cultivating agricultural crops, investors can make great losses or profits.
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There are several types of investments that you can make in corn and wheat, first you directly invest in the agricultural sector starting from finding superior seeds, planting, harvesting and selling agricultural products, second you are only a trader who buys from farmers and collects after that you sell to the processing plant. Third you can invest by buying shares in corn and wheat processing companies. Factors to consider are the capital and skills you have.
