President Barack Obama plans to curb or halt domestic spending in several areas, but luckily for agriculture exchange traded funds (ETFs), the Department of Agriculture is not among those that may see spending reduced.

The president’s proposed freeze is expected to be a major feature of the budget he’s supposed to deliver to Congress next week. In the budget, he intends to show how serious he is about slashing the deficit, says Grand Times Herald. A three-year freeze in spending on agriculture is expected, which is far better than the 5% cut that had been feared.

Meanwhile, the agriculture sector here has other struggles. U.S. cattle herds have fallen to sizes not seen since the 1950s, as the economic slowdown prompted dairy producers to cull animals. Whitney McFerron for BusinessWeek reports that wholesale choice-beef prices averaged $1.4071 a pound last year, the lowest level since at least 2004, as U.S. job losses climbed and meat demand declined. [The outlook for agriculture.]

Futures prices for feeder cattle, the young animals that ranchers sell to feedlots to be fattened for slaughter, averaged 96.821 cents a pound last year on the Chicago Mercantile Exchange, the lowest level since 2003. Beef production for 2010 is not expected to be quite as small as 1958, though, because the average animal now weighs twice as much, says one rancher. [A closer look at the ETF MOO.]

Sugar is one area on a definite uptrend right now. The commodity hit a 29-year high this week, and have shot up 32% since early last month, says Stephen Bernard for the Associated Press. Where it will go next is up in the air; it hit a psychological level of 30 cents a pound, but some feel that there’s room for more.

  • PowerShares DB Agriculture (NYSEArca: DBA)

  • UBS E TRACS CMCI Agriculture TR ETN (NYSEArca: UAG)

  • iPath Dow Jones AIG Livestock TR Sub-Index (NYSEArca: COW)

  • PowerShares Global Agriculture (NYSEArca: PAGG)

  • iPath DJ AIG Sugar ETN (NYSEArca: SGG)

Note that some of the funds above are exchange traded notes (ETNs), which are dependent upon the credit of the underlying bank; ETNs are a structured note, created as a senior debt note by a bank. This means if the bank goes under, you’ll have to get in line with the other creditors. Also, the ETN tracking error is paid for by the issuer, not the investor. [Differences between ETFs and ETNs.]

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