Demographics are interesting. The fact that the human population of planet Earth is growing at a rate of about 78 million people per year is something that can make a portfolio manager’s brain shout “Opportunity!” But how does one grasp the significance of so many additional souls being added to the population each and every year, and how does one determine how to deploy resources to benefit from this understanding?

Seventy-eight million people are equivalent to about twice the population of California. That’s how many new people will require food, clothing and housing every year on our planet. That’s in addition to those of us already here; each and every one of us eats and uses a lot of stuff every day, and commodities form the basis of all the stuff we use. Throughout the course of our lives we will all become consumers of commodities in different ways, in different amounts, and for different reasons; but the very first thing we all consume at birth is food. We are all fed and kept warm by someone until we are capable enough to provide for ourselves and those around us the food and warmth we need to survive. In fact, throughout our lives, perhaps the very last thing we will allow is for ourselves, our families, and our animals to be hungry or cold.

With this in mind, it should come as no surprise to investors that long-term 20-year analysis of 13 specific commodities, all of which are available to investors in the single commodity exchange-traded product format, consistently shows sugar, grains and natural gas as the least correlated commodities when compared to the S&P 500 Index.

It makes sense that if we do not want to be hungry (think grains and sugar) and we do not want to be cold (think natural gas) we will consume these commodities no matter what story is headlining in markets, politics, technology or weather. This is likely why major commodities in the agricultural sector have price movements that are often less correlated with stocks and bonds than do other commodities — including precious metals. More specifically, the major agricultural commodities of sugar, corn and wheat have all exhibited weaker correlations to the S&P Index than crude, gold and other precious metals over the past 20 calendar years ending December 2016.

However, direct exposure to agriculture and grains is often an overlooked asset allocation strategy. Portfolio managers and asset allocators would be wise to consider that global demand for grains is increasing every year. This increasing demand is not just due to a rising population; it also stems from a variety of other factors.

Few people are aware that the four big agricultural commodities of corn, soybeans, wheat and sugar are linked to the transportation fuel sector of the global economy. Our current transportation infrastructure is largely fueled by gasoline blended with ethanol and by diesel fuel. Corn and sugar are the two main global feedstocks for ethanol; oil derived from soybeans (soybean oil) is used to create biodiesel. Wheat feeds many billions of human and animal mouths each day, but it too is used as a feedstock in ethanol plants.

Demographically, it is not just a rising global population causing higher and higher rates of grain consumption; per-capita grain consumption is also linked closely to how people live their lives and spend their income. The projected rise in the number of people classified as “middle class” between now and 2030 provides a glimpse of what may continue to drive rising future rates of grain consumption.

We all must eat, and it turns out that what we eat changes with our economic circumstances. Studies show that when even a small bit of disposable income becomes available, most people around the globe will increase their daily intake of animal-based proteins, which means they create a higher demand for grains because animals are fed with some combination of one or all of the main agricultural crops of corn, wheat and soybeans. And it is not just what we eat that changes when incomes rise.

Consider for a moment the fact that if a person participates at all in the modern global economy, grains will likely touch almost every aspect of their lives. The top four global uses of corn are as animal feed, as fuel, as sweetener and as starch. That means that if today someone consumed products derived from animals, used motor fuel, drank a sweetened beverage or used paper (held together with cornstarch), then that person was probably a consumer of corn, and likely of sugar, wheat and soybeans as well.

Fortunately, this enormous and growing global demand for grains is met — most of the time — by an equally enormous and growing supply of grains. Genetic engineering of crops, improvements in farming methods and technology advancements in farm equipment have all combined to enable farmers around the globe to meet the challenge of rising global grain demand.

But there is a relatively delicate balance between supply and demand, because agricultural products grown in a year are usually almost completely consumed within that same year. This means that if there is any supply disruption at all in given year, the delicacy of the balance between supply and demand becomes paramount. Think about it. If it does not rain enough in the U.S. Midwest this summer, how much will people cut back on their consumption of grains? Will people stop using animal products, transportation fuel, sweeteners, or paper because weather conditions in some far away farming region were suboptimal?

History shows us that demand for grains is growing, that grains are less correlated over long periods of time to the S&P 500 than many other commodities, and that supply disruptions occur — often resulting in rapid and significant price appreciation within the grains sector. Are you looking seriously enough at the grain sector as a direct investment allocation within your portfolio?

Sal Gilbertie (sal.gilbertie@teucrium.com) is president, CIO and co-founder of Teucrium.