follow the smart money

I know there's been lots of discussion on where RP prices will go, what are MAK doing, etc. I do quite a lot of reading and research, and have formed the opinion that if you believe in following the smart money, then agriculture is one of the best places to be in the next few years.

From my reading, a very important ratio to follow (for agriculture) is the "Stocks-to-Use" ratio, and for commodites such as corn and wheat, this ratio is at lows not seen since the 1970's. This means that inventories are very lean. Moreover, they barely even budged during last years record crop.

In my opinion, the facts remain, that farmers world wide have recently utilised far less fertiliser etc due to a combination of reduced availability of credit and lower prices in agricultural commodities, and at some stage it is highly likely that yields will reflect this. The bumper crops of last year were just that, and not likely to be repeated this year, creating more pressure on supply/demand of agricultural commodities.

It may well be that the down trend in agricultural stocks has already bottomed. Check out the charts of stocks like "DBA" in the US (index tracker on agriculture). Then check out a stock like "POT" in the US. They're both slowly but surely grinding higher now.

Drivers for such an agricultural uptrend include population growth, increased use of bio-fuels, and changes in dietary patterns on a macro scale (leading to a pull on things such as grain usage for livestock).

Big trend investors like Jim Rogers are very keen on AG products like corn, soybeans, and fertiliser, some say for very obvious reasons.

Do your own research.

In my opinion, the big trend from here is UP for agriculture. This leads me to conclude that stocks like MAK will eventually follow suit.

Uncertainty in MAK's pending operations is in my opinion creating opportunity to get in at or near the bottom, in a stock that has major leverage to any uptrend in agriculture. If the smart money is correct, and the facts are starting to speak for themselves that they are, then RP prices will eventually follow suit and follow AG up, and MAK will become a major player in the ensuing uptrend.

I don't know where the bottom is for rock phosphate, and hence for MAK, nobody does. But I do know that the fundamentals are pointing to higher prices in agricultural commodities, which will lead to higher prices in fertiliser usage, which will lead to a higher price of products such as rock phosphate, which will lead to a much higher price of MAK, due to its "non-producer to producer" leverage.

Again, do your own research.

Regards

K