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The Honeybee Mystery: What it means to you and your investments

Here at the Stockmasters, we're always on the lookout for an angle, some type of edge that we can use to make money (and help you make it too). In this day and age, the best way to achieve investment success is by knowing something that others don't, to try and find something that the investment community has overlooked. With that said, in the past year, 24 U.S. States have reported Honey Bee disappearances. Government and science authorities are calling it "Colony Collapse Disorder (CCD)." Beekeepers have reported losses ranging from 60% to 100% of their bee colonies.

A third of the food supply in the United States - and actually the world - is directly related to the honey bee: Fruits, vegetables, nuts. Then, there is probably another 30% of what we consume that honey bees are indirectly responsible for. Take the milk we drink. The cows have to have hay. They need to eat clover and alfalfa to produce milk.

This isn't just an isolated incident in the United States. Canada has reported similar problems, along with Spain, Poland, and Brazil. In Taiwan, about 10 million bees have gone AWOL in the last 2 months. Part of the mystery is that beekeepers aren't finding millions of dead bees in the hives and on the ground; they are flying away from the hive and not returning. Experts have no real idea what causes CCD. Alleged causes range from harmful pesticides and increased solar radiation through ozone thinning, to falling queen fertility and use of unauthorized bee treatments. German researchers recently suggested mobile phone radiation may interfere with bees' "navigation systems", resulting in an inability to find their way back to the hive. A recently published report is blaming 'Varroa mites", which have piercing and sucking mouthparts and feed on the blood of honey bee adults, larvae and pupae. Even the Christians have thown in their two sense, with there article entitled Missing Bees, Cell Phones and Fulfillment of Bible Prophecy. (That is priceless) Or maybe this is all a big publicity stunt, orchestrated by Jerry Seinfeld for his new movie - Bee Movie?

As you can see, there are a lot of theories, but the bottom line is scientists are stumped. Historically, there have been times when the honey bee population has decreased, but nothing comparable to the current crises.

This article is not all about gloom & doom though. I am optimistic that if the problem gets bad enough, the human race will find away to fix it. The real question here is how can you prepare yourself, and profit, from what could be a global food shortage?

First, let's talk about how to prepare yourself and take a lesson from the Church of Latter Day Saints, commonly known as Mormons. They believe that there will be a massive starvation - and they might get their wish this time. Every Mormon I've met has massive stockpiles of food in their basement and is obsessed about canning equipment. What I'm trying to get at is it wouldn't hurt to stockpile some food, just in case the stores run out.

Now let's get to the fun part - how can you profit from a global food shortage? It's a daunting task, but I think you will find that the results are quite intriguing. The most obvious place to start is:

The Futures Market: I won't lie and tell you I am an expert in the futures market. My specialty is Stock Mastery. But you're about to get a crash course of what will and will not be profitable in the futures market.

CATTLE - Like I said earlier, Cattle depends on Hay, Clover & Alfalfa as food sources. Take away the food source, and we have less supply in a high demand market.
COCOA - Don't worry, your chocolate isn't going anywhere. Cocoa, derived from the Cacao plant, pollinates from small insects.
COFFEE - In most instances where pollination of coffee was studied, the honeybee was the most important - however, Africanized 'killer' bees can also do the job, and in some cases do it better. There is an Arabic coffee bean that self pollinates.
CORN - Corn does not require bees for pollination, however, corn prices may inadvertently increase because of the lack of other foods available.
GOLD 100 OZ - This would be the classic panic buy if the honey bee issue does turn into a major problem.
SOYBEAN - Prepare yourself for meals of Tofu. Soybeans self-pollinate.
SUGAR - no dice, sugar doesn't rely on the honey bee.

ORANGE JUICE - Gold mine! Or is it? As Billy Ray Valentine (Trading Places) would say: Yeah. You know, it occurs to me that the best way you hurt rich people is by turning them into poor people. Would Orange Juice be affected by the lack of honey bees? That's a tough call. Navel oranges don't need bees, but a lot of other orange varieties do need bees to pollinate their fruit. The problem is, OJ futures have already had a huge run-up in the last year because of the late frost that killed the greater part of crops. The run from $100 to $200 has since corrected to around $150, but the price is still high.

If you're not familiar with the Futures market, here is a good site to view charts and quotes

Now that we've covered the futures market, let's delve into the world of Stocks. You don't have to be an Economics major to realize that if 1/3 of the food supply turns up missing this summer, our economy will most likely enter a recession. Here is a list of stocks in the Farm Produce industry; this sector would most likely get hit the hardest. My top pick from the list is (FDP), Fresh Del Monte Produce. I can't give you all the answers on this one or this article is going to turn into a novel, so do a little research and use your best judgment.

Symbol, Company, Name, Industry
ALCO Alico, Inc. FarmProd
BVAGF Bevo Agro Inc. FarmProd
CALM Cal-Maine Foods, Inc. FarmProd
CCCFF Chai-Na-Ta Corp. FarmProd
CQB Chiquita Brands International, Inc. FarmProd
CRESY Cresud Inc. (ADR) FarmProd
CVGW Calavo Growers, Inc. FarmProd
FDP Fresh Del Monte Produce Inc. FarmProd
HORT Hines Horticulture, Inc. FarmProd
IVUMF Innovium Capital Corp. FarmProd
KNUR Knox Nursery, Inc. FarmProd
MNUFF Menu Foods Income Fund FarmProd
MRGO Margo Caribe, Inc. FarmProd
NUT ML Macadamia Orchards, L.P. FarmProd
OPMX Optimax Industries, Inc. FarmProd
ORGT OrganiTECH USA, Inc. FarmProd
RDLYF Ridley Inc. FarmProd
SOYL American Soil Technologies, Inc. FarmProd
SVIN Scheid Vineyards Inc. FarmProd
UGLNF Agricore United FarmProd
VIFL Food Technology Service FarmProd
WFSTF Western Forest Products, Inc. FarmProd
ZTM Z-Trim Holdings Inc. FarmProd

To summarize: if you're the bull type, your best bet is to go with the Commodity futures market. My assumption is Gold, Corn, Cattle, Coffee, and Orange Juice could have an edge. If you're the bear type, look for Farm Produce stocks, or any stocks that could indirectly be affected by the honey bee drought.

The ballot is still out on whether or not the disappearing honey bees will actually cause a global impact or not. More data will come in the summertime when farmers report their yields (or lack thereof). There is also a huge debate on whether other pollinators can take the place of honey bees. I recommend keeping a very close eye on the situation, and take steps to prepare yourself. Stay tuned for a follow up article this summer.

Article written by: Eric Cheshier
Article posted on: April 29th, 2007

Disclaimer: The Author owns no commodity futures and none of the stocks mentioned during the time of this publication.