One of the most talked-about global trends in recent years has been the rapid growth in population. As emerging markets around the world enter periods of robust growth, their populations have also been on the rise. Though a growing worldwide population will certainly cause a number of issues, it will also present commodity investors with a fair amount of opportunities, as some hard assets represent a great way to profit from the current trend [for more commodity news and analysis subscribe to our free newsletter].
The Statistics of Population Growth
The world’s population has doubled since 1960, as a number of countries have experienced exponential growth. Globally, we currently sit around the 7 billion threshold, but that is predicted to eclipse 8 billion by 2030, and 9 billion by 2050 as emerging markets continue to develop and grow. Our population adds about 142 people every minute, or 75 million on an annual basis.
With staggering growth predicted to hold at least through the end of the century, there are a number of commodities that will see their demand continue to grow, allowing investors to make a nice return. Below, we outline three commodities that may be set to soar and how you can invest in each.
Water to Soar
Though not often thought of as a traditional commodity, water is easily the most inelastic resource in the world. It is one of the most basic necessities for human life, yet just 1% of the world’s water is available for human consumption.
The U.S. alone needs around $1 trillion in water infrastructure improvements, as the nation currently loses 1.7 trillion gallons annually due to leaks and water main breaks. It is also predicted that by 2025, approximately two-thirds of the world’s population will experience water stress. Below, we outline how to tap into this commodity:
Food Commodities Will Jump
Yet another basic human need–the demand for basic food commodities–is set to soar right along with the population. Currently, the USDA estimates that the annual demand per person averages out to 4.77 bushels of corn, 1.35 bushels of soybeans and 3.54 bushels of wheat [see also 50 Ways To Invest In Agriculture].
Assuming the rate of consumption per person stays the same, that would mean that we will need 6.13 bushels of corn, 1.74 bushels of soybeans and 4.55 bushels of wheat per person by 2050, a marked increase. Below, we provide you with some popular options for investing in food commodities and the agricultural world:
- DB Agriculture Fund (DBA)
- Market Vectors-Agribusiness ETF (MOO)
- DJ-UBS Grains Total Return Sub-Index ETN (JJG)
- Teucrium Corn Fund (CORN)
- Teucrium Soybean Fund (SOYB)
Energy Commodities to Power Up
With a larger population comes a greater need for energy commodities. While the latter point is fairly obvious, choosing which energy commodity will be dominant in 2050 is certainly a tough call. As of late, it seems that many producers have been investing more in natural gas and attempting to ween off of crude oil.
But there are other alternative energies that have been in the mix for quite some time now. Below we provide you with a number of options for investing in energy; the hard part will be deciding which you think is set to benefit the most in the coming decades:
- Energy Select Sector SPDR (XLE)
- ISE-Revere Natural Gas Index Fund (FCG)
- WilderHill Clean Energy Portfolio (PBW)
- Devon Energy (DVN)
- Chevron Corp (CVX)
- First Solar Inc (FSLR)
Disclosure: No positions at time of writing.