View from the Observation Deck

1. The S&P 500 price-only return was 24.2% from 4/23/02-4/23/12. Soft commodity prices performed as follows: Sugar (+261.%); Coffee (+226.7%); Corn (+213.2%); Soybeans (+203.2%); Cotton (+163.2%); and Wheat (+136.3%).
2. Since commodities have historically been priced in U.S. dollars, its performance should be noted. The U.S. dollar declined 31.9% (U.S. Dollar Index/DXY) against a basket of currencies for the 10-year period ended 4/23/12. The declining dollar clearly provided a boost to those soft commodity returns.
3. One of the key drivers of the demand for agriculture products in the past 10 years is the rising standards of living in emerging market (developing) countries, particularly the BRIC (Brazil, Russia, India and China) countries. Africa could play a role moving forward.
4. China, India and Brazil spent the majority of 2010-2011 raising interest rates to curb inflation, which naturally tempered some of each nation's economic growth.Brazil and India have begun to cut their benchmark rates.
5. A recent survey by the Norton Rose Group found that 91% of respondents believe the BRIC countries will have a significant impact on the future of agri-business as both producers and consumers.
6. Overall, 67% of international respondents from the food and agriculture industries said they intend to increase investment in agri-business over the next 12 months.
7. Events like food shortages, droughts, and natural disasters can influence agriculture prices in the short-term. Investors focused on the long-term growth potential of agriculture products should consider buying on dips, in our opinion.