Commodity prices are in the midst of a bull run these days, and agriculture is at the forefront. This activity has put agriculture exchange traded funds (ETFs) in the spotlight as investors look for ways to get exposure.
The Short-Term Case
Agriculture prices are rising, and analysts say that the fundamentals for more gains are in place over both the long- and short-term.
Grain prices in particular have surged on a host of factors. The U.S. Department of Agriculture slashed its forecast for global wheat production in 2010-2011. Production has been hampered by severe drought in Russia, which caused the country to ban exports of the crop, hot weather in Iowa and the EPA’s recent decision to raise the ethanol blend rate.
The U.S. Department of Agriculture also cut its harvest projections for corn, soybeans and wheat, adding fuel to the commodity-rally fire. Meanwhile, further concerns about a food shortage are becoming a reality.