Tag Archive | Agriculture

5 ETFs To Hedge Against Inflation

As the US government has resorted to excessive spending measures to keep the economy from completely crumbling, many investors suggest that inflation is inevitable and could even prevail in the coming months. 

Current economic data suggest that inflation is running lower than expected; however there are numerous reasons to think that inflation will eventually be inevitable.  Some of these reasons include the Federal Reserve’s implementation of QE2, which launched in early November, the increases in money supply in the earlier stages of the Great Recession to ignite a spark in the US economy and rising commodity prices are likely to take their toll on the consumer price index (CPI).  In fact, rising prices have already started to emerge, evident through the recent rise in energy prices (i.e. crude oil and gasoline), food prices (i.e. wheat, sugar, coffee and soybeans) and airline tickets.  Read More…

Four ETFs Impacted By Increasing Food Prices

The global price of food continues to increase illustrated by the United Nations Food and Agriculture Organization’s monthly food price index rising to 214.7, the sixth consecutive month that the index has risen as supply and demand  imbalances continue to take their toll on food prices. 

Demand for food continues to rise as wealth in developing nation like China, India and Brazil has elevated food consumption as consumers in these nations starve of their traditional eating habits and seek more of a Western-style diet. This elevated demand, combined with supply constraints, has provided positive price support to commodities like corn, wheat, coffee and cotton and cooking oils. Read More…

Looming Sugar Shortage Launches Sugar ETFs

On Friday, concerns over future supplies of sugar pushed prices up to their highest levels since November 10th as inclement weather in the US and declining output in Brazil pave the path to projected shortages on the supply side of the commodity. 

Mother Nature is delivering one of the coldest weathers in the past decade throughout parts of the United States causing freezing temperatures in Florida to severely damage sugarcane crops and limit future production of sugar.  Read More…

Three Possible New ETFs To Play Commodities

As commodity ETFs have witnessed increased investor demand and increased returns over this year, there have many new resource-specific ETFs brought to market and now the United States Commodity Funds plans to introduce three more funds giving exposure to copper, agriculture and metals. 

The three aforementioned resource-specific commodity sub-sectors have been at the pinnacle of performance during the last 12 months and are expected to continue to shine in the near future.  Copper, which is used in pipes, tubing, wires and other industrial uses, is expected to witness increased demand over the next few years as global economies, in particularly in emerging markets like China and India, continue to grow.  In fact, global demand of copper is expected to outpace supply in 2011, the first time in four years, giving the metal even further positive price support. Read More…

India Supply Concerns Boost Sugar ETFs

Heavy rainfall and inclimate weather have taken its toll on India’s second largest producing state having many investors worried that global supply for sugar will not meet demand sending prices higher and providing positive price support to the iPath DJ-UBS Sugar TR Sub-Idx ETN (SGG), the PowerShares DB Agriculture Fund (DBA) and the UBS E-TRACS CMCI Agriculture TR ETN (UAG).

Elevated demand for sugar has resulted in a diminishing supply of global sugar stock levels, pushing levels to their lowest point in 20 years and prices of raw sugar prices back up towards their 30-year high levels.  Furthermore, yields in Uttar Pradesh, which is India’s second largest sugar producing state, have been cut enhancing fears that India may not produce the expected 25 million ton crop that the global market place has been hoping for, reports Caroline Henshaw of the Wall Street JournalRead More…

Three ETFs To Avoid Increased Margin Requirements On Commodities

On Wednesday, the CME group raised margin requirements on trading soybeans futures contracts, shortly after the Chicago exchange increased margin requirements to curb silver and cotton trading, further boosting the appeal of exchange traded funds (ETFs) which enable investors to gain exposure to these commodities.

Margin requirements are the minimum deposit, or cash, that a trader is required to put with up an exchange to cover inherent risks involved with trading commodities.  When compared to stocks, in general, commodities are traded in margin accounts, where traders has the ability to control contracts with values a lot more than what they have in accounts. Read More…

4 ETFs To Play Ethanol

As governments continue to place an emphasis on renewable energy, many suggest that the future prospects for corn and sugar cane-based ethanol is promising giving support to the Teucrium CORN (CORN), PowerShares Global Agriculture (PAGG), Market Vectors Agribusiness (MOO), and ELEMENTS MLCX Biofuels ETN (FUE).

In Brazil, the main source of fuel in automobiles is already ethanol as most of the nation’s vehicles used for transportation can either run solely on ethanol or utilize a flex-fuel system which uses a mix of gasoline and ethanol.  The success of Brazil’s use of ethanol has many other nations looking at it as a viable power source.  Read More…

Four ETFs To Play Global Food Demand

Agriculture prices have surged this year as demand for grains, dairy, meats and cooking oils have elevated in emerging markets and supply has remained constrained enabling the Market Vectors Agribusiness ETF (MOO), UBS E-TRACS CMCI Food TR ETN (FUD), iPath DJ-UBS Agriculture TR Sub-Idx ETN (JJA) and the PowerShares DB Agriculture Fund (DBA) to reap the benefits. 

On the demand side, increased wealth in nations like China, India and Brazil has elevated food consumption as consumers in these nations starve of their traditional eating habits and seek more of a Western-style diet.  This elevated demand, combined with supply constraints, has already driven up the prices in commodities like corn, wheat, coffee and cotton and now is aiming to hit cooking oils. Read More…

Four ETFs To Play Corn’s Shine

As supply and demand imbalances continue to take their toll on corn and other agricultural products pushing prices of these commodities higher, the path to prosperity could potentially be paved for the the Teucrium Corn (CORN), the PowerShares DB Agriculture Fund (DBA), the PowerShares Global Agriculture (PAGG) and the Market Vectors Agribusiness (MOO).

Recently, the US Department of Agriculture released a report illustrating that corn yields are lower than expected resulting in downward revisions to future crop estimates, pushing prices of the sough after commodity north of $5 per barrel.   In fact, the USDA projects that in 2011, supplies as a percentage of usage would be at their lowest level in 15 years.  Furthermore, grains have already been hit by a supply shock earlier this year by the severe drought seen in Russia. Read More…

Beef Shortage Could Boost Agriculture ETFs

As the global appetite for cattle widens and supplies in the US begin diminishing, a supply and demand imbalance could potentially push cattle prices through the roof enabling exchange traded funds like the PowerShares DB Agricultural Fund (DBA), the iPath Dow Jones-UBS Livestock Subindex Total Return ETN (COW) and the UBS E-TRACS CMCI Livestock TR ETN (UBC) to reap the benefits. 

Demand from around the world for cattle is increasing as wealth, purchasing power and widening of a middle class in developing nations increases and desires for a Western way of life prevail.  According to data from the US Department of Agriculture (USDA), export volume of US beef rose by 26 percent year-over-year through May of this year, with an overwhelming spike in demand coming from Asia.  The report indicates that exports to Hong Kong rose by 126 percent, to South Korea by 74 percent and to Taiwan by 54 percent.  Additionally, demand from other emerging and frontier markets is strong, illustrated by a 3,628 percent increase in exports to Russia and a 234 percent increase to Egypt.  As a result of this improved demand, the US, which is the largest beef producer in the world, is expected to ship more than 2 billion pounds of beef and veal overseas this year for the first time in nearly 7 years. Read More…

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