ETF Trends
ETF Trends

The materials sector was a solid performer, a theme that helped the VanEck Vectors Agribusiness ETF (NYSEArca: MOO) and one that can extend in 2017. The PowerShares DB Agriculture Fund (NYSEArca: DBA) is another avenue for tapping agriculture plays.

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. DBA’s technicals are encouraging.

“DBA smashed through a bearish trendline that had capped it for six months and simultaneously catapulted above its 50-day moving average. To put an exclamation point on the move, Wednesday’s breakout occurred on double the average volume,” according to TheStreet.com.

Last year, MOO was boosted by mergers and acquisitions activity, among other catalysts, including chemicals giant Bayers AG’s all-cash bid for Monsanto Co. (NYSE: MON). MOO tracks global agricultural companies engaged in agri-chemicals, animal health , fertilizers, seeds, traits, farming, irrigation, farm machinery and various agricultural production.

A more focused agribusiness equity play is the Global X Fertilizers/Potash ETF (NYSEArca: SOIL).

SOIL provides targeted exposure to fertilizer producers around the world. The broader MOO includes companies involved in agri-chemicals, animal health, fertilizers, seeds and traits, farm/irrigation equipment and farm machinery, along with agricultural products, agriculture and fishing and livestock plantations. PAGG also takes broad coverage of agriculture and farming related businesses.

The fertilizer industry strengthened on the potential merger activity. Fertilizer companies have suffered from lower profits in recent years after crop nutrient prices fell to multi-year lows on excessive supply and demand and declining commodity prices.

“MOO is clearly in an uptrend, as evidenced by a series of higher lows (HL) and higher highs (HH). This price action is mirrored by the higher lows and higher highs in MOO’s MACD (moving average convergence divergence) indicator, which tells us that MOO’s uptrend is likely to continue,” reports TheStreet.

MOO’s technicals are also appealing.

“In December, MOO reached a fresh 52-week high; then the ETF pulled back sharply, creating a potential buying opportunity. MOO’s MACD is on the cusp of executing a bullish crossover (shaded yellow). That buy signal could occur as soon as today,” notes TheStreet.

For more news and strategy on the Agriculture market, visit our Agriculture category.

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.