Sugar, Corn, Ethanol, and Other Stuff Too

Anybody following the grain markets (or buying boxes of cereal) knows that prices are up. Why? and how do you take advantage?

I am not a fundamental expert, but I can rehearse to you some of the underlying supply and demand factors.

CORN (yellow didn't show well so I used blue font, because there is also blue corn)
There is relatively new legislation forcing our country to use more ethanol in fuel. This demand has been met mostly by using corn starches to make the ethanol. This has driven up corn prices for a while.

SUGAR (this is the color of sugar in the raw)
Sugar is probably the most efficient and least socially harmful way to create ethanol, though this has not been used as much. I suspect with the effects of world hunger from less corn for food, and with the increasing price of corn, there will be increased demand for sugar in coming months/years.

I have tried to take advantage of both these markets though I do not trade commodities. For a person who does not trade commodities, you depend on companies with exposure to the underlying market or to ETF's that track commodities.

DBA is an ETF that tracks corn, wheat, soy beans, and sugar. I have options on this ETF which expire in October. IPSU and CZZ are companies that produce and refine sugar. I have options on IPSU which expire in October. I feel that those securities will give a person a chance to benefit from these trends. I think both could have a ways to go before saying they are too high to purchase and still expect good gains.

If anybody wants further analysis of these markets or trading/investing ideas, please post a comment/question.

Pete