Cashing In on the Commodities Boom

What's behind rising crop prices and how you can invest in what goes into your cereal box.

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While life on Wall Street grows increasingly painful, it's boom time in the heartland. With the world's most powerful financial firms walloped by multibillion-dollar losses tied to complex mortgage arrangements, surging prices for good old-fashioned crops have put winning lottery tickets in the hands of farmers across the country. Wheat futures hit an all-time high in December, and soybeans broke a contract record this month, while corn prices reached their highest levels in more than a decade.

The increase in agricultural commodity prices has taken place over the past couple of years. It's due largely to the growing buying power of consumers in emerging markets and greater demand for biofuels in the United States.

But the agricultural boom is much more than just a curious economic phenomenon: It offers individual investors a menu of ways to get in on the action. Seed producers, fertilizer makers, and farm equipment manufacturers have all dished out handsome returns as the boom has progressed.

So, what's the best way to turn rising soybean prices into investment returns? How about the outlook for wheat prices next year? And what do investment professionals say about the future of the agriculture boom? Is it too late to get in on it? The U.S. News Money & Business team has some answers.

What's Pushing Up Crop Prices
  Five key factors have fueled the boom, and the outlook is for continuing strong demand.

3 Farm-Equipment Stocks to Watch
  One avenue into the commodity boom is through companies that sell machinery to farmers.

Investing in Commodities Funds
  Just a few exchange-traded funds and notes provide access to this tricky market.

Growth Areas: Seeds and Fertilizer
  These companies profit from the commodities run-up indirectly but handsomely.

Subsidies and High Crop Prices
  Not everyone is a fan of the commodity boom. Some blame federal policy for higher feed and food bills.

A Long-Term Bull on Agriculture
  But fund manager Jeff Auxier warns that some commodity-related stocks are too hot to handle now.