This from TFN’s Andrew Snyder:

The two-day rally started yesterday when DryShips (NASDAQ:DRYS) announced it reached a deal to restructure two of its loans. Shares jumped from $5 to $6 yesterday, and up to and over the $7 mark today.

This is great news for an industry that has been reeling in pain after the collapse of the global credit market. After years of expansion in a dire effort to keep up with exploding global demand, the industry is laden with debt.

Ships ain’t cheap

With a bit of light at the end of the credit tunnel, paying for all those new ships may not mean selling them at bargain basement prices, especially now that it looks like the rates shippers charge may be on the rise.

The closely monitored Baltic Dry Index made its biggest one-day move since this mess started last fall. Top rates hit four-month highs of $22,000 and are expected to climb as high as $30,000 in the coming weeks, thanks to increased demand from the Chinese steel industry.

So who are the winners and how do you play this news? First, in addition to dry ships take a look at companies like Eagle Bulk Shipping (NASDAQ:EGLE) and Excel Maritime Carriers (NYSE:EXM). Those two are up by 30% and 25%, respectively.

It sounds like a great, wealth-generating turnaround, but only the folks savvy enough to buy at recent lows are counting their profits. After all, shares of Excel hit lows more than 94% off last spring’s high.  There is plenty of more room to climb.

I would treat this sector like any other speculative investment. There are a lot of variables surrounding the shipping industry and almost all of them depend on a growing global economy. Right now, that could be months, if not years away.

But with credit becoming available and shipping rates rising once again, there is hope. At this point, the reward may not have overpowered the significant risk of selected industry bankruptcies, but we are getting much closer. As soon as more news of debt restructuring hits, you should gobble up all the shares your speculative portfolio can handle.

There is a good chance we are witnessing a strong turnaround in the indicative sector.

Source: The shipping industry stays afloat

I am hungry, but I cannot afford to eat.  Sure, I say that now because I am scrimping for a wedding, and more importantly, a honeymoon in 31 days, but I may not be able to use that excuse for long.  Soon, all of us could feel the pain.  And I am not talking about the pain of married life (I have been hearing a lot about that).

Over the last month, food-related riots have broken out all across the globe.  Because of soaring demand and a lowered supply, food prices are sky-high and folks are fed up (pardon the pun).  It looks like the problem is about to get worse.

No soup for you

Just yesterday, one of the nation’s largest grain producers announced it is forced to cut off its exports to the rest of the world.  With food prices soaring within its borders, Kazakhstan (the fifth largest wheat exporter) wants to ensure its people can afford to eat before it feeds the rest of the world. 

By propping up local wheat supply, Kazakhstan hopes to lower the prices its citizens have to pay.  Unfortunately, the reduced global supply will push wheat prices even higher for the rest of us.

The story is even worse in the rice markets.  Indonesia was the latest country to ban rice exports.  It joins India, China, Vietnam, Egypt, and Cambodia.  It is no wonder rice prices soared to set new records.  Instead of getting the global expansion so desperately needed, the world’s markets are contracting.

Unfortunately, the United States and its import-everything mentality will feel the brunt of the pain.  Need proof?  How about a dollar that is weaker than a five-year-old Girl Scout. 

Over the past year, the nation’s food prices are up by 4.4%.  Unfortunately, the inflation is just beginning.  With export bands, soaring demand thanks to bogus alternative energy political agendas, and a burgeoning population, the price you pay for a loaf of bread today may look like a fantastic deal this time next year.

Oh, ship!

So how can you profit from this global crisis?  Unless you are willing to plant wheat in your front yard and turn your swimming pool into a rice pond, you will have to turn to the equities market.  Right now, your best bet is to take a short position on the nation’s dry-bulk shippers.

Over the last month or so, the share price for many of these carriers has gained a few extra points.  Wall StreetWall-Street-Layoffs was excited about a few analyst upgrades and the return of growth in the steel and coal industries.  But a reduction in wheat and rice exports is going to put an end to the party. 

The bans may be temporary, but they cast an unforeseen shadow over future earnings.  Wall Street hates anything that was not predicted. 

Two of the most popular dry-bulk investments are DryShips (DRYS:NASDAQ) and Eagle Bulk Shipping (EGLE:NASDAQ).   Take a close look at September 2008 Calls that are close to being in-the-money.  Thanks to the recent bullishness, they are selling at a discount.  It won’t stay that way for long.

It may be the twenty-first century, but this planet still faces some major food issues.  We could be in for some tough times.