Corn-Indiana's top agricultural crop-is a better investment than oil, copper and other commodities, Goldman Sachs and other Wall Street firms are telling clients.
Agricultural products are more likely to withstand a global economic downturn because people still have to eat, according to a Bloomberg report. Consumers in China and other emerging Asian markets will continue upgrading their diets despite turbulence in subprime mortgage markets in the United States.
"Even if America goes bankrupt, those 3 billion people are going to continue to do well and eat more," said Jim Rogers, a former hedge fund manager who started the Rogers International Commodity Index. Rogers predicted the 1987 stock market crash and the 1999 launch of the commodities boom.
Corn offers investors opportunities because prices dropped after farmers planted the most acreage since World War II to take advantage of the burgeoning ethanol plants. Indiana farmers planted 6.6 million acres this year, a whopping 20-percent increase.
Demand for corn will continue not only for food but also because of the seemingly insatiable appetite of new ethanol plants coming online, the investment firms say.
Expectations for high corn prices in coming years have prompted farmers and other buyers to bid up prices of farmland. Earlier this month, Purdue University said the average price of bare farmland boomed 17 percent to 19 percent, depending on quality of the soil.