Commodity ETFs and the Changing World

October 26th at 6:00am by Tom Lydon

Food is a necessity of life, no matter where one lives or how much  money they make. This fact alone makes an agriculture exchange traded fund (ETF) investment that much more appealing for an investor’s portfolio.The fact that everybody needs to eat and the notion that food and eating patterns are transforming, there is a great opportunity in the agriculture industry.  Money and Markets for The Trading Reports states that there are three big trends converging to bring about a dramatic shift in what and how people eat around the world:[Getting Agriculture Exposure With ETFs.]

  1. Modern Technology: This is opening up new frontiers in food production. Genetically-engineered seed, sophisticated fertilizers, and massive water projects allow farmers to harvest more from every acre, and let them produce from land that was once unusable.
  2. Shifting Diets: People in the “Emerging Market” nations of China, Brazil, India and many others are changing their diets along with their economies. Millions are finding they can afford things that used to be occasional luxuries: Meat, milk, and even sugar. And so goes the rise of the middle class.
  3. U.S. Shifts Diets: Americans are changing their diets, too. Obesity is a national problem — and is hitting the pocketbook in the form of higher health care costs. We aren’t all going on the South Beach Diet, however, our eating habits are changing, slowly but surely.[The Commodity ETF Surge Is No Pork Belly.]

The global food production industry is shifting and changing and it is crossing many sectors. Agriculture is so broad that some of the stocks can be found in “Materials,” “Industrials,” and even “Natural Resource” funds, as well as “Consumer Staples”.

Various ETFs To Play The Trend:

  • Market Vectors Agribusiness (NYSEArca: MOO)
  • PowerShares Global Agriculture Portfolio (NYSEArca: PAGG)
  • PowerShares DB Agriculture (NYSEArca: DBA)

For full disclosure,Tom Lydon’s clients own shares of MOO.

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.