The boom in international food prices was good news for Argentina, which exports these commodities and whose sales generate income in dollars. For those who want take advantage of the positive trend but they do not have large areas of land, there are some financial instruments that allow you to gain exposure to the products of the field.
Options range from Mutual funds until the futures and the trusts closed. The choice will have to do with the investment objectives, the amount that each one is willing to allocate and the profile of risk.
1. Investment funds
As published in this medium, the Common Investment Funds (FCI) are collective investment vehicles easy to subscribe for small savers, with low amounts of minimum investment and a diversified portfolio, managed by professionals. The menu is very broad and there are some FCIs that invest in agricultural commodities.
“The local investor, from the Argentine investment account of IOL Invertironline, can subscribe the FCI Premier Commodities, which has a position of 50% of the portfolio in soybean futures traded through MatbaRofex. It also maintains exposure to other assets such as gold, oil and iron ore through cedears. In 2020 it accumulated a return of 91.5%, and was one of the funds with the best performance of the year. It is interesting to note that minimum investment is $ 100″, They explained from the Stock Exchange society.
2. Agricultural actions
Although they are few, in the Argentine market they can be obtained Actions of companies that are active in the agricultural sector. From IOL they detailed that Cresud is a company with direct investment in fields but they also mentioned Irsa Y Adecoagro, who have one foot in that business. In the case of Adecoagro, the company is listed abroad, so it is only available through the transfer, which also offers the advantage of being an asset that allows dollarization.
3. Agricultural futures
Those investors a little more sophisticated and with a greater financial back can invest directly waiting for the rise or fall of soybeans, wheat and corn Through the MatbaRofex agricultural futures market. “It is important to know that, to earn money, the scenario that the investor projected has to be set. That is, if you bought a future and the market goes up, then you win on the price difference. No guaranteed profit and it is important to do a preliminary analysis before leaning towards one trend or the opposite, ”highlighted sources from that market.
For financial investors, the futures market offers 10-ton “mini” contracts, with financial settlement. This means that the commodity does not have to be delivered but price differences are settled every day between the sold or bought contract and the daily price of that same position.
This operation is available to individuals who can bear the costs. In the case of a mini contract, the market asks for the deposit of a margin of guarantee equivalent to US $ 140 for soybeans, US $ 100 for wheat and US $ 110 corn. This constitution can be done in cash or with other financial instruments and is used for the market to execute it in case the investor does not pay the daily differences.
Then you have to fund the account at the agent authorized to operate in the market, to pay the daily differences, if applicable. To that will be added the commission of the broker. The interesting thing about the futures market is that investors can win both with the rise or the fall of the product and they only need to constitute the margin of guarantee (which is paid in pesos at the exchange rate set by MatbaRofex) to start operating.
4. Funds from abroad
In the United States there are investment funds that bet on certain assets and are listed on the Stock Exchange, called ETF. Some local brokerage houses, such as IOL, allow you to invest in them from Argentina. “There is an ETF called Soybean which provides an easy way to gain exposure to the price of soybean futures in the international market because it is positioning itself in the different contracts ”, they indicated from IOL, which allows users to access these instruments.
And they added that there is also an ETF available for those who want expose yourself to the rise in the price of coffee, which gained 53% in the year. It’s called iPath Series B Bloomberg Coffee Subindex Total Return ”and it trades bean futures whose price rose due to poor harvests in producing countries and increased demand during the sanitary isolation.
For sophisticated investors, there are other alternatives that complete the menu of investments related to the field. An example are the closed trusts of Surmax, an economic group that is dedicated to the agro-livestock business and exports both meat and cereals. The company’s chief financial officer, Omar De Lucca, highlighted that the investment in livestock it has the advantage of not being correlated with the weather and he considered that it is an opportunity to safeguard purchasing power.
Unlike other options mentioned in this note, Surmax trusts subscribe in dollars, with minimum amounts that start at US $ 500 and ensure profitability in the same currency. “In the case of the Livestock Trust, the return is fixed at 12% per year in dollars per contract, while in the case of the Agricultural Trust, the return is also fixed at 14% per year in dollars per contract,” said De Lucca.