Agriculture ETFs: Stocks or Futures? | ETF Trends

The record heatwave has decimated crops across the U.S., and investors seeking to take advantage of rising grains prices may consider futures-based or equities-based exchange traded funds.

Agriculture meteorologists expect the summer heat to keep pressuring crops in the southern and central Corn Belt as the U.S. crop growers suffer from the worst drought in 50 years, reports Christine Stebbins and Sam Nelson for Reuters. [Will Rain Help Agriculture ETFs?]

“There’s no big huge relief seen,” John Dee, an agricultural meteorologist for Global Weather Monitoring, said in the article.

“Crops will continue to deteriorate. The corn crop is already gone and in the north and east, beans will improve some but not in the southwest,” Don Keeney, meteorologist for MDA EarthSat Weather, said.

Investors seeking to directly capitalize on the higher prices in agricultural commodities may consider futures-based ETFs, like the PowerShares DB Agriculture Fund (NYSEArca: DBA). DBA holds a basket of commodities futures contracts, including cattle, cocoa, coffee, corn, cotton, lean hogs, soybeans, sugar and wheat.

However, for those who want a more focused exposure, the Teucrium Corn Fund (NYSEArca: CORN) provides exposure to the daily changes in settlement prices on three futures contracts for corn traded on the CBOT – the multiple contracts help spread the risk and diminish the risk of contango in the futures market. [Corn Prices Lead Agriculture ETFs on Drought Forecast]