For many investors and analysts, China continues to be a main draw. The nation's large population, changing dynamics and fast-growing economy are all hallmarks of the emerging market thesis. However, to support its quickly budding economy, China's hunger for commodities and natural resources continues to increase at a rapid pace. So much so, that executives at mega-miner Rio Tinto (NYSE:RIO) expect Chinese demand for several key commodities to almost double within 15 years. Even with commodity prices rising over the last two years and some Chinese demand already factored in, the long-term argument is still there. For investors, there's still time to profit from China's big three.

TUTORIAL: Economic Indicators To Know

Corn, Coal and Copper
Chinese demand for a variety of various natural resources continues to grow, but the trio of corn, copper and coal could be the best ways for investors to profit from its voracious appetite. Each is seeing tremendous demand growth as the nation needs to feed and provide power for its expanding population.

Power outages and black-outs have become commonplace in the nation as it continues to need more energy to support its population. To support its energy habits, China has emerged as the largest consumer of coal. Burning nearly 10 million tons of the fuel source daily, China currently receives 70% of its energy from coal. Coal consumption in the nation is nearly 3 times that of the United States. Despite efforts to add a variety of renewable energy, long-term demand for coal in the nation is strong. Analyst's estimate that China's thermal coal imports will rise to 200 million tons in 2015 from around 90 million tons this year.

China is also the second-largest consumer of corn. Urban incomes have more than tripled over the last decade and the country's newly emerged middle class has acquired a taste for protein. Corn is the main feed for both chickens and pork, both of which have seen their consumption double as well. China is on pace to purchase 5 million metric tons this year, up from about 2 million tons in 2010. The lack of water and arable land will make China a net-importer of the grain for quite awhile.

As both a component of infrastructure and consumer products, copper remains an important commodity in China. China currently accounts for 40% of world copper consumption and demand for the red metal is expected to grow by 7% this year. Analysts also expect the nation to undergo a large-scale restocking during the second-half of this year.

Playing The Three C's
Despite, the recent debates on whether China will face a soft or hard economic landing, it still needs to power and feed its people. For investors, playing the three C's is a great way to continue to stay invested in China. Adding a fund like the Market Vectors Hard Assets Producers ETF (NYSE:HAP) is an easy way to play the overall theme. However, there are plenty of individual ways to hone in on that exposure.

With coal prices and demand rising in China, the Market Vectors Coal ETF (NYSE:KOL) is still the best way to play the sector. The ETF follows 36 different coal companies including heavyweights like Peabody Energy (NYSE:BTU). For a direct Chinese play, Yanzhou Coal Mining (NYSE:YZC) recently boosted its dividend and reported an EPS gain of 22% in Q1.

Tracking a basket of copper miners, the Global X Copper Miners ETF (NASDAQ:COPX) is a great way for investors to play Chinese demand. In addition, until a physically backed copper ETF launches, the iPath DJ-UBS Copper ETN (NYSE:JJC) allows for investors to play the price of the physical metal.

Finally, with corn demand soaring, agricultural processors like Bunge (NYSE:BG) and Archer Daniels Midland Company (NYSE:ADM) will continue to see impressive gains in the region. The Global X Farming ETF (NASDAQ:BARN) offers a great catch-all play on the sector.

The Bottom Line
With its fast growing economy and enormous population, China's appetite for commodities seems never ending. The trio of corn, copper and coal represent a great long-term proposition as the nation pulls out all the stops to feed and power its people. For investors, adding a position in any of the ETFs listed or funds like the Teucrium Corn (NASDAQ:CORN) makes sense. (For additional reading, also check out How To Invest In Commodities.)

Use the Investopedia Stock Simulator to trade the stocks mentioned in this stock analysis, risk free!

Related Articles
  1. Chart Advisor

    Copper Continues Its Descent

    Copper prices have been under pressure lately and based on these charts it doesn't seem that it will reverse any time soon.
  2. Options & Futures

    Cyclical Versus Non-Cyclical Stocks

    Investing during an economic downturn simply means changing your focus. Discover the benefits of defensive stocks.
  3. Mutual Funds & ETFs

    Buying Vanguard Mutual Funds Vs. ETFs

    Learn about the differences between Vanguard's mutual fund and ETF products, and discover which may be more appropriate for investors.
  4. Mutual Funds & ETFs

    ETFs Vs. Mutual Funds: Choosing For Your Retirement

    Learn about the difference between using mutual funds versus ETFs for retirement, including which investment strategies and goals are best served by each.
  5. Mutual Funds & ETFs

    How to Reinvest Dividends from ETFs

    Learn about reinvesting ETF dividends, including the benefits and drawbacks of dividend reinvestment plans (DRIPs) and manual reinvestment.
  6. Investing Basics

    How to Deduct Your Stock Losses

    Held onto a stock for too long? Selling at a loss is never ideal, but it is possible to minimize the damage. Here's how.
  7. Mutual Funds & ETFs

    Best 3 Vanguard Funds that Track the Top 500 Companies

    Discover the three Vanguard funds tracking the S&P 500 Index, and learn about the characteristics and historical statistics of these funds.
  8. Forex Fundamentals

    How to Buy Chinese Yuan

    Discover the different options that are available to investors who want to obtain exposure to the Chinese yuan, including ETFs and ETNs.
  9. Mutual Funds & ETFs

    ETF Fees: Why BlackRock is the Latest to Cut Them

    Low expense ratios are a big selling point for ETFs, but are they being focused on too much?
  10. Economics

    Is Wall Street Living in Denial?

    Will remaining calm and staying long present significant risks to your investment health?
  1. Should mutual funds be subject to more regulation?

    Mutual funds, when compared to other types of pooled investments such as hedge funds, have very strict regulations. In fact, ... Read Full Answer >>
  2. Do ETFs pay capital gains?

    Exchange-traded funds (ETFs) can generate capital gains that are transferred to shareholders, typically once a year, triggering ... Read Full Answer >>
  3. How do real estate hedge funds work?

    A hedge fund is a type of investment vehicle and business structure that aggregates capital from multiple investors and invests ... Read Full Answer >>
  4. Are Vanguard ETFs commission-free?

    While some Vanguard exchange-traded funds (ETFs) are available commission-free from third-party brokers, a large portion ... Read Full Answer >>
  5. Do Vanguard ETFs require a minimum investment?

    Vanguard completely waives any U.S. dollar minimum amounts to buy its exchange-traded funds (ETFs), and the minimum ETF investment ... Read Full Answer >>
  6. Can mutual fund expense ratios be negative?

    Mutual fund expense ratios cannot be negative. An expense ratio is the sum total of all fees charged by an asset management ... Read Full Answer >>

You May Also Like

Trading Center