ETF spotlight on iPath Dow Jones-UBS Grains ETN (NYSEArca: JJG), part of an ongoing series. The exchange traded note vaulted about 6% on Tuesday ahead of a crop report. [Corn ETF Jumps Before USDA Report]

Assets: $220.9 million.

Objective: The iPath Dow Jones-UBS Grains fund tries to reflect the returns of futures contracts on physical commodities.

Holdings: The fund holds three grains futures contracts.

What You Should Know:

  • The ETN is issued by Barclays.
  • JJG has an expense ratio of 0.75%.
  • The fund is down 17.77% over the last month, down 10.17% over the past three months and down 17.52% year-to-date.
  • Commodity weightings include: Corn 40.06%, Soybeans 39.20% and Wheat 20.74%.
  • ETNs are debt instruments backed by the full faith and credit of the issuer. They follow an underlying index or product and anyone can buy them. Since they are debt instruments, if the issuer goes bankrupt, you become another creditor and you’ll have to get in line. [ETNs: Everything You Want to Know.]

The Latest News:

  • The JJG ETF was up 6% on Tuesday.
  • The U.S. Department of Agriculture estimates that the U.S. will harvest 7.3% less for 2011, reports Jeff Wilson for Bloomberg. The recent global economic slowdown has not diminished the demand.
  • “People still need food, even if they aren’t buying new cars, refrigerators or other durable goods,” Steven Nicholson, a commodity procurement specialist for International Food Products Corp., commented.
  • Nicholson projects prices may jump 19% by April since “production is not keeping up with rapidly expanding demand growth from developing nations.”
  • Even if we fall into another recession, Morgan Stanley analysts have pointed out that demand for soybeans, corn and wheat have still grown by an average 2% a year over the past five global recessions.
  • “Markets fret way too much about the impact of a potential economic slowdown on food demand,” Mike Rahm, the chief market strategist for Mosaic Co. (NYSE: MOS), previously stated. “There is a tug of war taking place between powerful outside market influences and strong agricultural commodity fundamentals. Agricultural commodity fundamentals are just too strong not to win this contest.” [Agriculture ETFs Level Off After Steep Drop]
  • “All the bad economic news is priced into the market, and now the focus will switch to supply-side worries,” Michael Swanson, senior agricultural economist at Wells Fargo & Co. (NYSE: WFC), said. “Supplies are tightening because growth in consumption has not diminished.”

iPath Dow Jones-UBS Grains ETN

For past stories in this series, visit our ETF Spotlight category.

Max Chen contributed to this article.

The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.