For investors looking for broad-based, diversified exposure to agriculture and soft commodities, the PowerShares DB Agriculture Fund (NYSEArca: DBA) is a solid choice.
The PowerShares DB Agriculture Fund tries to reflect the performance of the Diversified Agriculture Index Excess Return, which is comprised of futures contracts on the most liquid and widely tracked agriculture commodities.
In the early stages of 2017 there has been ample discussion regarding the stronger dollar and the odds of the Federal Reserve boosting interest rates multiple times this year, factors that would likely hamper DBA, DBA has been solid to start the new year with a gain of almost 4%.
The technical outlook for S&P GSCI Agricultural Index is compelling and although that is not DBA’s underlying index, that portends good things for the PowerShares agriculture ETF.
“The Agricultural Index is testing the long term bear market as evidenced by the test of the falling trendline,” reports ETF Daily News. “The Agricultural Index went through a 24-month bottom formation which is an exceptionally long time. Such a long bottom mostly suggests it is very solid support. The bottoms of 2015 and 2016 coincide with the 2010 and 2011 bottoms.”
DBA currently features exposure to 10 agricultural commodities, including live cattle, lean hogs, coffee, soybeans, corn and wheat.
Other agriculture ETFs include the Teucrium Corn Fund (NYSEArca: CORN), which “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 backwardation and contango,” according to Teucrium.
The Teucrium Soybean Fund (NYSEArca: SOYB) holds a mix of three different soybean futures contracts, including the second-to-expire contract at 30%, the third-to-expire contract weighted at 30%, and the contract expiring in the March following the expiration month of the third-to-expire contract at 35%.
For more news and strategy on the Agriculture market, visit our Agriculture category.
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