Easter Bunny may have serious trouble making deliveries this month. Changing fundamentals in the Agri-Food sector have pushed the price of eggs up dramatically. Easter Bunny might not be able to afford as many eggs this year. This week's graph is of cash price of a dozen eggs. While headlines may be filled with dramatic price move in wheat, eggs have been doing quite nicely. After touching about $0.63 per dozen earlier this year, that price moved to almost $1.49 six months later. Egg producers are not buying bank stocks, they are buying banks. Those in egg business, like CALM, have benefited dramatically from this situation. Higher grain prices mean that producers of Agri-Foods like eggs, where grains are the essential input, must receive higher prices in order to continue production. No ready substitute for eggs in most recipes. Demand for eggs is fairly price inelastic. Consumption is fairly immune to higher prices. Agri-Food fundamentals are like they have never been before.

Investors need to avoid being "headline trapped." Researching only what is popularly reported means one might miss a brightly colored egg lying in the grass. China and India have changed the dynamics of the entire spectrum of commodities. All three of the major commodity subgroups have shown special energy this past year. Agri-Food is simply one of those subgroups, and the one with the best long-term fundamentals. Unlike oil, no ready substitute for food exists. Unlike some minerals with new mines to be opened, no secret undiscovered area of productive farm land exists. With near non existent returns in the equity markets, investors should be seeking out investments that will enhance their ability to feed their family. Agri-Food investments are one of those alternatives that should be considered as a complement to your other inflation hedges.

AGRI-FOOD THOUGHTS are from Ned W. Schmidt,CFA,CEBS, publisher of Agri-Food Value View, a monthly exploration of the Agri-Food grand cycle being created by China, India, and Eco-energy. To review a recent issue, write to agrifoodvalueview@earthlink.net.