ETF Trends
ETF Trends

Looks like a storm is coming and wheat traders are worried. Wheat requires a very steady temperature and climate condition for optimal growth, and any disturbance to this balance usually translates to a spike in wheat prices and related exchange traded funds (ETFs).

Jason Ward, an analyst with Northstar Commodity remarked that ”it’s too wet in Canada and too hot and dry in Russia” and Kazakhstan, according to The New York Times. The weather won’t be clearing up soon, which could result in smaller harvests for the year.

The potentially reduced production has pushed buyers into U.S. market, driving up prices from the increased demand.

Wheat for September delivery ended at around $5.075 a bushel on Tuesday, the fourth consecutive day wheat prices have jumped. Wheat prices have gained 11.1% in those four days. [5 New Commodity-Based ETFs Coming Soon.]

For more information on wheat, visit our wheat category.

Currently, there are no wheat-specific ETFs. However, one may invest in other broad ETFs that include soft commodities. All of these ETFs have wheat futures contracts in varying amounts:

  • PowerShares DB Agriculture (NYSEArca: DBA): Wheat is 12.6%
  • iShares S&P GSCI Commodity-Indexed Trust (NYSEArca: GSG): Agriculture accounts for 16% of the fund
  • PowerShares DB Commodity Index Tracking (NYSEArca: DBC): Wheat is 5.6%

Max Chen contributed to this article.

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.