Agriculture exchange traded funds may be ready for a turnaround, which would be good news for the global economy and the so-called reflation trade.
One area of the markets which has been fairly quiet over the past six months has been anything agriculture related.
After having a significant run-up in the middle of 2010, soft commodities performed relatively poorly as new supplies and demand from emerging economies lessened while the European debt crisis erupted.
It has been some time since I heard the term “ag-flation” and wanted to bring up the very real possibility that a bottom may be in sight.
Take a look below at the price ratio of the PowerShares DB Agriculture Fund ETF (DBA) relative to the S&P 500 (IVV). As a reminder, a rising price ratio means the numerator/DBA is outperforming (up more/down less) the denominator/IVV.