The Russia-Ukraine war and the recent lockdown of major Chinese cities in response to a surge in COVID-19 cases have raised concerns over the supply of major agricultural commodities from these prominent exporters. Furthermore, following the surge in oil and natural gas prices precipitated by the U.S. ban on Russian energy imports, commodity prices have spiked recently.
Therefore, domestic agricultural commodity producers should witness surging demand and benefit from the rising commodities prices worldwide. Consequently, ETFs that offer significant exposure to agricultural commodities could be good bets now.
Invesco DB Agriculture Fund (DBA), Elements Rogers International Commodity Index - Agriculture Total Return ETN (RJA), Teucrium Corn Fund (CORN), Teucrium Wheat Fund (WEAT), and Teucrium Agricultural Fund (TAGS) have agricultural commodities in their portfolios. So, we think it could be wise to bet on these ETFs to capitalize on the rising commodity prices.
Invesco DB Agriculture Fund (DBA)
DBA seeks to track the Deutsche Bank Liquid Commodity Index-Optimum Yield Agriculture Excess Return Agriculture ER and offers exposure to agricultural commodities, thus making it a useful diversifying agent or inflation hedge. It tracks a rules-based index composed of futures contracts on the most liquid and widely traded agricultural commodities–corn, wheat, soybeans, and sugar. The fund has approximately $1.70 billion in assets under management (AUM). DBA’s major holdings include Invesco Treasury Collateral ETF (CLTL) and U.S. Treasury Bills.
XLE has a 0.93% expense ratio, which is higher than the 0.89% category average. The fund has gained 3.5% over the past month and 10.6% year-to-date. DBA is currently trading at $21.84, which is 31.8% above its 52-week low of $16.57. The ETF’s net inflows have amounted to $474.36 million over the past month.
DBA’s POWR Ratings reflect this promising outlook. The ETF has an overall A grade, which equates to a Strong Buy in our proprietary rating system.
DBA also has an A grade for Trade, Buy & Hold, and a B grade for Peer. Click here to see DBA’s component grades. Of the 116 ETFs in the A-rated Commodity ETFs group, DBA is ranked #6.
Elements Rogers International Commodity Index - Agriculture Total Return ETN (RJA)
RJA represents the value of a basket of 21 agricultural futures contracts for commodities consumed in the global economy that are selected based on volume and liquidity data as monitored and considered by the RICI committee. It is a consumption-weighted portfolio that cuts its benchmark's weights to corn and soybeans and expands its coverage to include agricultural feedstock and livestock. RJA has $207.90 million in assets under management.
RJA has a 0.75% expense ratio, which is lower than the 0.89% category average. RJA has gained 10.2% over the past month and 17.5% year-to-date. The ETF is currently trading at $10.16, which is 50.7% higher than its 52-week low of $6.74. The ETF’s net inflows have totaled $11.19 million over the past month.
RJA’s strong fundamentals are reflected in its POWR Ratings. The ETF has an overall B grade, which equates to a Buy rating in our proprietary rating system.
RJA also has an A for Trade grade and a B grade for Buy & Hold. Click here to access RJA’s rating in Peer grade. RJA is ranked #46 in the Commodity ETFs group.
Teucrium Corn Fund (CORN)
This fund offers exposure to corn, one of the world’s most important agricultural commodities, and potentially appeals as an inflation hedge. CORN is unique not only for the resources included but it mitigates or potentially eliminates the adverse impact of contango, making it more useful for investors expressing a longer-term outlook on the commodity. CORN has $207.20 million in assets under management.
CORN has a 2.19% expense ratio, which is higher than the 0.89% category average. CORN is currently trading at $26.59, which is 63.2% above its 52-week low of $16.29. The ETF has gained 13.2% over the past month and 23.4% year-to-date. The ETF’s net inflows amounted to $50.85 million over the past month.
It is no surprise that CORN has an overall A rating, which equates to Strong Buy in our proprietary rating system.
The ETF also has an A rating for Trade, Buy & Hold, and Peer. To see CORN’s POWR Ratings, click here. CORN is ranked #17 in the Commodity ETFs group.
Teucrium Wheat Fund (WEAT)
This ETF offers exposure to wheat futures contracts and reflects the performance of wheat by holding Chicago Board of Trade wheat futures contracts with three different expiration dates. The fund has approximately $454.70 million in assets under management (AUM).
WEAT has a 1.91% expense ratio, which is higher than the 0.89% category average. WEAT has gained 34.2% over the past month and 40.1% year-to-date. The ETF is currently trading at $10.35, which is 79.7% higher than its 52-week low of $5.76. The ETF’s net inflows amounted to $343.85 million over the past month.
WEAT’s strong fundamentals are reflected in its POWR Ratings. The ETF has an overall B grade, which equates to a Buy in our proprietary rating system.
WEAT also has an A grade for Trade. Click here to access POWR Ratings for WEAT’s Buy & Hold and Peer grades. WEAT is ranked #43 in the Commodity ETFs group.
Teucrium Agricultural Fund (TAGS)
TAGS is a fund-of-fund that holds four single-commodity Teucrium ETFs (CANE, SOYB, WEAT, and CORN) with exposure to corn, soybeans, wheat, and sugar. In their design, the four underlying funds depart from the market, eschewing front-month contracts for contango-mitigation strategies. The fund has approximately $26.50 million in assets under management.
TAGS has a 0.21% expense ratio, which is lower than the 0.89% category average. The fund has gained 15.9% over the past month and 23.4% year-to-date. TAGS is currently trading at $33.23, which is 55.6% above its 52-week low of $21.36. The ETF’s net inflows amounted to $11.93 million over the past month.
TAGS’ POWR Ratings reflect this promising outlook. The ETF has an overall B grade, equating to a Buy in our proprietary rating system.
TAGS also has an A for Trade grade, and a B for Buy & Hold grade. Click here to see TAGS’ ratings for Peer grade. TAGS is ranked #60 in the Commodity ETFs group.
DBA shares were trading at $21.78 per share on Monday afternoon, down $0.06 (-0.27%). Year-to-date, DBA has gained 10.28%, versus a -12.17% rise in the benchmark S&P 500 index during the same period.
About the Author: Sweta Vijayan
Sweta is an investment analyst and journalist with a special interest in finding market inefficiencies. She’s passionate about educating investors, so that they may find success in the stock market.
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