Growing up I knew medicine wasn’t in my  future, but occasionally I like to read up on interesting issues/ideas in Biology. However there is a topic no one is talking about and maybe they should be: the Ug99 fungus or Stem Rust fungus. What is it?  I don’t know fully but it’s a fungus that is killing wheat plants and according to this L.A. Times article, it could destroy up to 80% of the world’s wheat crops. It started in Africa but has already spread closer to Pakistan and will eventually get to the United States. Scientists are in a race to come up with a resistant plant crop, but as of right now, nothing is close to being immune to the fungus. The problem is that the fungus can spread by air so it’s going to get worse before quickly unless a cure is found. This is not new to the World; it has just been a few decades before the stem rust mutated again. This is such a huge problem that the Gate’s Foundation gave $26.8 million in 2008 to Cornell University for research on the situation.

Think this doesn’t have anything to do personal finance? Clearly, if 80% of the world’s wheat crop is gone, this is going to have huge ramifications on our daily food consumption and costs. Remember back about a year ago when everyone was complaining about food and gas prices going up? Well, if these predictions are true, wheat prices could be going up more dramatically than most of us have ever seen in our lifetime. We need to protect ourselves by hedging if this fungus is as dangerous as it sounds. While buying wheat futures contracts might be an option for some, it’s not reasonable for most and I would rather go ETF/ETN route. This might be a little bit easier as you can trade this like a stock and don’t have to set up an account trading futures.  Here are several good candidates: DBA, JJA, RJA, JJG, & GRU. I like GRU since, as far as my research shows it is holding about 50% Wheat while the others are more diversified in their holdings. Also, I looked hard for a pure wheat ETF but, as of right now, I don’t think there is one. I will modify the post if I turn out to be wrong.  Please note, GRU’s volume is very low so if you are looking just for a hedge this might be right but it’s not as liquid as other stocks/ETFs.

Now I don’t know if this fungus will stop in India when scientists cure it and that’s the end of the whole thing. But one sign that I may be on to something comes from the fact that GRU was only down about 1% while the others are down closer to about 4% today. It could be a number of reasons like lack of volume or just dumb luck. At the present moment, this Stem Rust fungus doesn’t look to be clearing anytime soon. It is important that we spread the word and also look to protect (hedge) ourselves if the fungus does spread as quickly and radically as expected.

photo: usda.gov