While many are still arguing whether a bull or bear stock market is ahead, whether the euro bond is the only solution to the European crisis. The much-overlooked agriculture commodity market is quietly shooting up to a new level.

Let’s take a look at the S&P GSCI® Agriculture Index which provides investors with a reliable benchmark for investment performance in the agricultural commodity markets. As of December 30, 2011, it consists of agriculture commodities shown in the chart on the left.

If you have been following my blog, in Sep 2010, when agriculture commodity markets were still relatively quiet, I was advocating using agriculture commodity to diversify the portfolio. True enough, the global food price index hit a record high in early 2011, and many of my clients have made decent returns.

I still remember vividly that at the time, many new “agriculture funds” were launched. The bullish future of agriculture commodity was reported in the newspaper every week just before the markets crashed and many investors were stuck in the funds since then. (you can refer to the chart below for the historical performance of the agriculture index).

Ironically, I rarely see this kind of report on this later when the market rallied more than 20% in weeks, neither does any fund manager talk about it. Everybody is talking about Europe debt crisis but the stock market never went the way it was “supposed” to.

When next time you start to see interviews of the grand future of the agriculture commodity market, you should know what to expect.

About the Author

Ivan Guan is the author of the popular book "FIRE Your Retirement". He is an independent financial adviser with more than a decade of knowledge and experience in providing financial advisory services to both individuals and businesses. He specializes in investment planning and portfolio management for early retirement. His blog provides practical financial tips, strategies and resources to help people achieve financial freedom. Follow his Telegram Channel to join the FIRE community.
The views and opinions expressed in this article are those of the author. This does not reflect the official position of any agency, organization, employer or company. Refer to full disclaimers here.

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