Farming Your Agriculture ETF Options
September 17th, 2010 at 3:00pm by Tom Lydon
Gold? We don’t need no stinkin’ gold. At least, that’s what some people say when they turn their attention to agriculture exchange traded funds (ETFs).
Wheat, corn, cotton, sugar and coffee are hot commodities now, and those who know such things about the agriculture sector say we’re only at the beginning of a bull.
Cases in point:
- The United Nations Food and Agriculture Organization is holding an emergency meeting next week to discuss whether we’re in the early stages of a global food crisis. [Will Ag ETFs Grow After Spring Rains?]
- Agricultural land with water on it may prove to be very valuable in the future, fueling a rush to invest in farmland. Commodity guru Jim Rogers has predicted that agriculture will be one of the greatest industries over the next 20 years. The basic thesis behind owning a farm is the possibility of a food shortage and a hedge against inflation, reports Matt Theal for MinyanVille. [Play the Commodity Boom With Jim Rogers.]
- Weather has wreaked havoc. Grain prices are rising this year because of supply concerns from Russia; hot weather in Iowa; and a possible EPA decision on raising the ethanol blend rate. All of these factors may grow and then create the fear to drive food prices higher.
If you’re thinking that you actually have to buy a farm to play the surging activity in agriculture, there’s good news: you don’t. There are several ways to get agriculture exposure, including:
- The ETFs of agriculture-rich economies, such as iShares MSCI Australia (NYSEArca: EWA) and iShares MSCI Canada (NYSEArca: EWC).
- Equity ETFs that own the stock of agricultural commodity producers, such as Market Vectors Agribusiness (MOO), Market Vector Hard Assets Producers (NYSEArca: HAP) and PowerShares Global Agriculture (NYSEArca: PAGG).
- ETFs that own futures contracts on various agricultural commodities, such as PowerShares DB Agriculture (NYSEArca: DBA) and Teucrium Corn (NYSEArca: CORN).
Tisha Guerrero contributed to this article.
The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.