Almost all of the speculative froth has been blown off the agriculture sector in the past 6 months. The long-term picture for food still looks good, with the world population still growing like mad and Asia in a secular upswing (if cyclical trough). Grains are relatively cheap by historical standards (100 years, not 10!), and while much of this is due to technology, I suspect that this century’s productivity gains will pale in comparison to those of the 20th.

The DBA ETF is an easy way to play, with about equal parts corn, wheat, soy and sugar. I’m going to be scaling in on weakness:

Click for larger view. Source: Yahoo! Finance.

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Agriculture is a perfectly good inflation/currency failure hedge, and it benefits from positive fundamentals, unlike many other such plays.

In a depression, grains have a leg up on metals, since even though not much will be built in the next few years, people still need to eat. Furthermore, as governments get more and more reckless with their market interference, they are likely to screw up supply by enacting tariffs, price controls, wars and other nonsense that causes shortages.

Likewise, oil at lower prices will be a great buy. New demand or not, supplies are tight and getting tighter. Peak oil is real — this also has implications for agricultural prices.

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I’m no perma-bull here: I made a 10-bagger on DBA calls last fall-winter and got out before the top. This time I’m not trading, but buying to hold. As in gold, I will welcome lower prices in the next few months.