Agribusiness ETF Moos At Energy-Bill Signing

Hungry for profit? Agricultural funds might fill your craving. - Investor's Business Daily

Take Market Vectors Agribusiness (AMEX:MOO - News). The exchange traded fund tracks the DAXglobal Agribusiness Index (from the Frankfurt exchange). With 37 stocks in its basket, the fund offers investors a chance to own a piece of all things agricultural, from farm-equipment makers to livestock providers.

Apart from its entertaining ticker, the nearly 4-month-old fund has kept investors smiling since its inception. It has an Investor's Business Daily Relative Strength Rating of 90, and has been finding support at its 10-week line despite a slight pullback last month. With $441 million in assets, 93% of its holdings are in food-related manufacturing companies. The remaining 7% are in health care and consumer services companies.

While the fund hit its low at 40.19 the second week out, it's been moving steadily upward since then. Hovering around 53.50 on Thursday, it has been reaching to recoup its Dec. 7 record high of 54.95.

You Gotta Eat
Food doesn't go out of fashion. Even after the market dived in 2002, agribusiness remained steady.

In fact, demand for food and food-related products is shooting up. Burgeoning economies in emerging markets such as China and India have given rise to an expanding middle class. More wealth results in a change in diet with more demand for meat and animal products. Raising those animals requires more grain.

It doesn't look as if the world's appetite will be satisfied anytime soon, either. The United Nations predicts that the world's population will rise by 50% by 2050.

Energy Bill

In addition, increased biofuel use around the globe translates to higher corn, sugar and palm oil production. Here in the U.S., President Bush signed off on a new energy bill Wednesday that sets higher vehicle fuel economy standards and household appliance efficiency standards. It also mandates increased production of renewable fuels.

The fund's biggest holdings, which include some of agribusiness' heaviest hitters, are reaping those benefits. Most moved up Wednesday after the energy bill was signed.
At 10% of the fund, Mosaic (NYSE:MOS - News) is leading the pack. One of the world's leading fertilizer and pesticide producers, the Plymouth, Minn.-based company has an outstanding 99 RS rating. Mosaic has beat estimates two quarters in a row, and analysts expect its earnings per share to rocket up 325% this year from 80 cents to $3.40.
Agricultural biotech giant Monsanto (NYSE:MON - News) is also pushing up the fund. As the ETF's second-biggest holding at 9%, Monsanto develops insect- and herbicide-resistant seeds and other agricultural products.