Exchange traded funds that invest in the agriculture are struggling to stay in the green for the year after trending lower since the winter.
Even with the recent heat wave threatening North America’s crops and a potential drought induced famine in East Africa, agriculture stocks and related ETFs have remained relatively unfazed.
The agriculture experts believe that investors need to be given some more time before they are swayed by valuations again, reports Peter Koven for Financial Post. [ETF Spotlight: Market Vectors Agribusiness]
“It’s going to be a gradual recovery,” remarked Edlain Rodriguez, an analyst at Gleacher & Co.
In the meantime, grain prices are gaining as the sweltering weather threatens to damage crops. Additionally, fertilizer producer Mosaic Co. (NYSE: MOS) has reported robust earnings, which bodes well for other fertilizer firms. [ETF Spotlight: PowerShares DB Agriculture]
However, some observers believe that current crop prices are unsustainable, stating that prices could plunge after farmers increase planting and capitalize on high prices, or due to the U.S. putting a limit on its ethanol subsidy program.