An Agriculture ETF Poised to Pop as Dollar SlumpsAgriculture exchange traded funds are among the assets that have recently been benefiting from the slumping dollar. That group includes the PowerShares DB Optimum Yield Diversified Commodity Strategy Portfolio (NasdaqGM: PDBC).

Most commodity-related exchange traded funds track a basket of futures securities. Consequently, investors should understand how the underlying futures markets work and the effects they will have on ETFs.

PDBC follows the DBIQ Optimum Yield Diversified Commodity Index Excess Return, “an index composed of futures contracts on 14 heavily traded commodities across the energy, precious metals, industrial metals and agriculture sectors,” according to PowerShares.

PDBC “is trading within an ascending triangle pattern. This bullish continuation pattern is popular amongst active traders because a close above the upper trendline is a clear buy signal and is usually followed by a surge in momentum. In this case, active traders will likely set their buy-stop orders above $17.61 and attempt to protect long positions by placing stop-loss orders below the combined support of the 200-day moving average and/or the lower trendline, which are both trading near $16.41,” reports Investopedia.

For investors looking for broad-based, diversified exposure to agriculture and soft commodities, the PowerShares DB Agriculture Fund (NYSEArca: DBA) is a solid choice.

The PowerShares DB Agriculture Fund tries to reflect the performance of the Diversified Agriculture Index Excess Return, which is comprised of futures contracts on the most liquid and widely tracked agriculture commodities.

Investors are warming to PDBC as the ETF has hauled in nearly $182 million in new assets year-to-date, a total exceeded by just four other PowerShares ETFs.

PDBC currently features exposure to 14 commodities, four of which are agriculture products. Five are industrial or precious metals and the remainder are energy commodities.

PDBC tries to maximize potential roll yield returns but is structured as a 1940s Act Registered Investment Company, so investors would only have to fill out a form 1099.

For more news and strategy on the Agriculture market, visit our Agriculture category.

Post Comment