Agriculture ETFs soar

As drought conditions persist in the Midwest, agricultural commodities supplies are threatened.

By MSN Money Partner Jul 23, 2012 10:40AM

By John Nyaradi

 

The Midwest remains under a record heat wave, sending shock waves through agricultural commodities.

 

Supplies are threatened and crop failure is being discussed as summer wears on.  June was the fourth-hottest month ever, according to the National Oceanic and Atmospheric Association.

 

Most analysts forecast higher prices, as the drought is expected to continue into late July. Soybeans have reached record highs, and corn is also near a record high on commodity futures exchanges.

 

PowerShares DB Agriculture ETF (DBA) was up 3% last week. The ETF tracks the Deutsche Bank Liquid Commodity Index -- Optimum Yield Agriculture Excess Return and its components include corn, wheat, sugar and soybeans

 

Tecrium Corn ETF (CORN) added 4.2% for the week. This ETF tracks the closing prices of three corn futures contracts on the CBOT

 

Tecrium Soybean ETF (SOYB) rose 4.9% last week. The ETF tracks the weighted average of the closing settlement prices for the three soybean futures contracts.

 

Overall, ETF prices have seen sharp rises with PowerShares Agriculture ETF up 17% since June 4, Tecrium Corn advancing 41% since mid-June and Tecrium Soybean ETF up 23% since June 1.

 

Bottom line

Profit opportunities could be ahead for agriculture ETFs, but the sector will be volatile and completely weather dependent. Investors and traders need to be nimble and able to respond quickly to changing market conditions.

 

John Nyaradi is Publisher of Wall Street Sector Selector and author of the book "Super Sectors: How to Outsmart the Market Using Sector Rotation and ETFs." His articles have appeared in Market Watch, and Yahoo Finance among others. Follow him on Twitter @WSSectorSelect

20Comments
Jul 24, 2012 10:19AM
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MSN Why can't you do something about the dating site spam littering this forum??
Jul 24, 2012 11:22AM
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I just wanted to say what a lame a$$ job the web moderator is doing on this site. 

 

Why even bother to comment here? 

Jul 24, 2012 11:28AM
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17 comments and 15 are spam.  I give up.
Jul 24, 2012 11:58AM
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This is an important topic and I thought I would be interested in what others had to say about it. But this comment section is filled with dating site spam. I guess they aren't bothered by soaring prices of food and fuel. 
Jul 24, 2012 12:56PM
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Find a lonley hearts club site you morons!
Jul 24, 2012 12:00PM
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 Surely there must someone in charge here to cleanup this BS.
Jul 24, 2012 12:17PM
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Now gas prices will go up because the geniuses put 10 to 15% ethanol (corn) in gas!!  WTF!!
Jul 24, 2012 1:23PM
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Get rid of ethanol mandates and most of this problem goes away.
Jul 24, 2012 12:48PM
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I expect much higher prices come fall and winter. Better buy now while it's still relatively cheap.
Jul 24, 2012 10:00AM
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you just need a good corn holeing ****
Jul 24, 2012 4:02PM
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Obama just announced that huge watersheds will be built along the Mississsipi river to take the yearly flood waters from the river and store them in this watersheds in the midwest.  This will allow the food belt to be used irrigated in emergencies.     No this will not happen our Governement is to stupid.
Jul 24, 2012 3:18PM
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What?  Food comes from a farm and not a grocery store?  That's what many people seem to think.  The farm sector is subject to weather irregularities, hence the futures market. We need to restore market conditions to this sector by ending subsidies or price controls for corn ethanol, sugar and whatnot.  We always pay for misallocated resources in the end in so many ways.  Unfortunately, the statists are in charge.  Let's just hope that when the roof falls in on the bastardized economy and wrecked healthcare system that they aren't in control of what they used to call the press (the media) as well. 
Jul 24, 2012 3:58PM
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Have no fear, Obama just announced that all grain exports of corn, wheat and rice are suspended until food prices get lower, In addition all Ethynol production using anything else but rice hulls, and sugar cane are suspeneded.  Gasoline prices will be held down by forced US Gasoline production, and banning all exports of finished hydorcarbons from US shores.   In addition, Obama will register as a republcan and be voting for Romney this time around.
Jul 24, 2012 2:17PM
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Sounds like a excuse to raise prices. Why do we always try to predict nature. Sounds like there hasn't really been a crop failure yet.

 

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