CORN provides investors unleveraged direct exposure to corn without the need for a futures account. The Teucrium Corn Fund was also designed to reduce the effects of contango. [Hedge High Food Prices With Ag ETFs.] Liquidity and the absence of carrying costs can make futures a convenient way to gain exposure rather than through direct physical ownership.
The catch is that the futures curve–the prices of contracts at progressively distant expiration dates–can take an upward slope (known as contango) or downward slope (known as backwardation). That slope can cause futures and spot returns to decouple.
Some agricultural ETFs include PowerShares DB Agriculture Fund (NYSEArca: DBA) and Market Vectors Agribusiness (NYSEArca: MOO).
For full disclosure, Tom Lydon’s clients own MOO.
Tisha Guerrero contributed to this article.