Mild Weather a Double-Edged Sword for Crops and ETFs | ETF Trends

Some nice weather could mean lower prices for certain crops, but it might not do anything to add to the performance of agriculture exchange traded funds (ETFs).

After flooding this summer, farmers in the Midwest staged a nice rally. They’re now on pace to produce the second largest corn crop and fourth largest soybean crop in history, says the Associated Press. Corn hit a record $8 a bushel earlier this year, and is now at $5 a bushel. It’s still higher than the 2006 prices, which stood at $2 a bushel.

The soybean crop is forecast to fall slightly, but the prices are still expected to drop. Wheat production is predicted to be slightly higher, also causing prices to dip a little.

Falling prices could deliver a dose of relief to farmers who rely on corn and soybeans for feed. High prices for grains have almost eliminated profits for chicken and beef companies this year.

It hasn’t been the best of times for commodity ETFs these last few weeks, and it has some asking if it’s time to stick a fork in them. One advisor tells investors not to panic, because much of the losses are reflective of a stronger dollar. But even with a strengthening dollar, there could still be room for commodities to resume the uptick.