Teucrium is the name of one of the newest exchange traded fund (ETF) providers. While it might not be well-known just yet, they’ve already made a splash with a first-of-its-kind commodity ETF.
Teucrium Corn Fund (NYSEArca: CORN), the industry’s first single agriculture commodity ETF, began trading in July.
Teucrium President Sal Gilbertie is no commodities newbie. He spent almost 30 years trading commodities and derivatives and started what’s now known on the Chicago Board of Trade as the ethanol swap. In fact, Gilbertie is such an expert on energy that “people call me petro-centric.”
Gilbertie takes pride in the fact that everyone at Teucrium has deep knowledge in the commodities space – they have all traded them at one point or another.
Although he officially made his move to enter the ETF world at the end of 2009, he and a team of people worked on getting Teucrium off the ground for a full year.
Gilbertie’s move into commodities isn’t because commodities are trendy, either. He believes in them.
“With the new world order of expanding commodities, world populations expanding, growing prosperity, demand for world resources is increasing, and that’s not going to go away,” he says, stressing that food and energy account for most of this demand.
He took on corn first because of its enormous size. “It’s in everything – in 25% of the items at the grocery store.”
The primary use is as feed for animals, which ties in once again to population growth and the whole demand picture: as more people become prosperous, they’ll eat a protein diet. [Why Investors Like Agriculture ETFs.]
Before bringing CORN to market, Gilbertie looked at all the issues and debates about contango and designed the ETF to address those concerns. CORN never holds spot. “We intentionally designed the benchmark to be multiple futures contracts, not just concentrated in one.”
In order to further mitigate the effects of contango, the contracts are spread throughout the crop year by holding the second and the third month, then the December after the third month.
Teucrium has five more ETFs waiting in the wings for regulatory approval: oil, natural gas, sugar, soybeans and wheat. [Agriculture ETFs: Withering Crops, Growing Prices.]
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