Agribusiness ETF Takes Root

January 11th at 9:01am by Tom Lydon

An agriculture-related exchange traded fund, Market Vectors Agribusiness (NYSEArca: MOO), has gained traction as the current weather in South America has damaged soybean and corn crops.

Longer-term, the ETF has been caught in a downtrend but recently broke above its 200-day moving average. Market Vectors Agribusiness was a top ETF seller in 2011, gathering net inflows of about $3.7 billion for the year, according to ETF Industry Association data.

The largest holding in MOO, Monsanto (NYSE: MON), exceeded analysts expectations in the most recent quarter.

“As food prices surge around the world it should create renewed interest in agriculture and suppliers to agriculture. Increased food prices and larger margins will allow producers to reinvest into more efficient equipment, benefiting suppliers. Additionally, the shift to biofuels is increasing demand for agricultural equipment and chemicals,” according to The Motley Fool.

Apart from crop production, farming suppliers are one of the world’s fastest-growing industries. As populations grow and emerging markets grow richer, farmers will have to maximize crop yields and use proper fertilizers to maintain growth condition, reports David gillie for ETF Digest, on The Street.

Dry weather continues to plague South America. Many soybean and corn crops have been ruined, creating a supply shortage. Corn, coffee, soybeans and sugar may also be affected. [Investors Shovel Cash into Agribusiness ETF]

“Hot, dry weather has already been hitting key growth regions in both Brazil and Argentina,” Ticonderoga Securities analysts said, reported by Barron’s. “This is important because the corn crop is approaching the summer pollination stage.” [Agriculture ETFs Can Help Grow a Portfolio]

Monsanto (NYSE: MON) reported fourth quarter earnings that exceeded forecasts. Revenues have grown for the company due to genetically modified corn seeds that have filled demand in both Argentina and Brazil, reports Stock Croc on Seeking Alpha.

Market Vectors Agribusiness


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.

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