Just Because Agriculture Prices Are Lower Doesn't Mean Demand Is Gone | ETF Trends

Grain prices have been falling along with exchange traded funds (ETFs), but that could soon change if demand keeps ticking up.

There has been a commodities selloff in recent weeks, but analysts say that this may not be the case for much longer, reports Sarah McFarlane for the Wall Street Journal. At the end of the day, after all, ya gotta eat, right?

It isn’t entirely clear if the recent weakness in prices means that investor sentiment toward wheat, soybeans and the like have changed, or if it’s the increased size of this year’s crop. Since the end of June, prices have fallen between 20% and 35%. Figures from last week, however, show that despite the size of the crop, global demand is rising quickly enough to justify high prices.

Meanwhile, gold continues to fluctuate along with oil and other commodities prices. It’s up this morning on news of a weakening dollar and rising oil, but experts predict that gold is headed for its sixth-straight losing week, says Pham-Duy Nguyen for Bloomberg.  Gold is currently about 25% off its record high of $1,033.90, reached on March 17 of this year. The last time it fell for six straight weeks was in May 2004.

Affected ETFs include:

  • E-TRACS UBS Bloomberg CMCI Food (FUD), down 1.4% since April 4 inception
  • ELEMENTS MLCX Grains Index TR (GRU), down 12.1% since Feb. 15 inception
  • PowerShares DB Agriculture (DBA), up 3.8% year-to-date
  • SPDR Gold Shares (GLD), down 5.9% year-to-date
  • iShares Silver Trust (SLV), down 4.3% year-to-date

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.