ETF Trends
ETF Trends

Monsanto (MON), a major holding of the Market Vectors Agribusiness (MOO) exchange traded fund (ETF), posted higher quarterly profits. That’s all good, right?

But the company’s stock still fell – there was disappointment that it didn’t raise its full-year earnings forecast, reports Carey Gilliam for Reuters. One analyst feels the company was too cautious. Shares of the company have risen more than 10% in the last six months before falling 6%, then rebounding to -2%.

Monsanto is the global leader in the development of biotech corn, soybeans, cotton and it makes up 8.4% of MOO’s assets.

It begs the question: when will agribusiness stocks and ETFs keep up with the commodity prices? While commodities have soared, the funds that hold the companies behind the commodities have been left in the dust.

PowerShares DB Agriculture (DBA) is up 11.4% year-to-date, while MOO is down 5%.
The two funds are very different: DBA holds futures for wheat, corn, soybeans and sugar. MOO invests in domestic and foreign companies engaged in the business of agriculture.

While logic would indicate that if the futures are doing well, the companies that are involved in the production of those commodities would be performing well, too. But Monsanto’s news today illustrates why this might not always be the case.

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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.