Think agriculture exchange traded funds (ETFs) have seen a top? The U.S. Agriculture Department’s Supply and Demand report might cause you to think again.
The USDA has forecast smaller harvests for many farm commodities worldwide. That’s because of two primary things: too little rain in Russia and South America, and too much rain in Australia and India.
But there’s also increasing demand, says MarketPlace. Developed nations in recovery mode have consumers spending more, while emerging markets have newly-minted middle classes who want more protein-rich diets. [Ag ETFs: No Signs Of Stopping.]
To that end, the Commodity Futures Trading Commission (CFTC) is going to be taking a look at limiting speculation in order to temper prices.
The Food and Agriculture Organization (FAO) has said that food prices, especially cereals and sugar, coffee, cocoa and tea, will remain high in the short-term as demand continues to grow against dwindling supply, reports John Gachiri for Business Daily. [4 ETFs to Play the Food Price Shock.]
Agricultural firms are relying on a food price rise to increase revenues and profit margins, which have been stagnant. You can get exposure to those producers in ETFs like Market Vectors Agribusiness (NYSEArca: MOO) and PowerShares Global Agriculture (NYSEArca: PAGG) are great ways to get exposure to them.
Although the CFTC is looking at speculation, you can get exposure for now to agriculture futures in ETFs like PowerShares DB Agriculture (NYSEArca: DBA) and Teucrium Corn (NYSEArca: CORN).
This is barely scratching the surface when it comes to agriculture ETFs; you can find them all in the ETF Analyzer!
Tisha Guerrero contributed to this article.