ETF Investors Separate the WEAT from the Chaff

When it comes to agricultural commodities, corn is king, but a wheat-specific exchange traded fund recently surpassed the corn ETF assets as more traders consider their options.

The Teucrium Wheat Fund (NYSEArca: WEAT), the lone wheat-specific ETF, has accumulated $68.0 million in assets under management while the Teucrium Corn Fund (NYSEArca: CORN), the only corn-specific ETF on the market,holds $66.3 million in AUM.

Sal Gilbertie, President, Chief Investment Officer and co-founder of Teucrium, pointed out that corn is also known as “King Corn” because in the U.S., we produce almost six-and-a-half times more corn than wheat – according to the latest USDA report for the current growing season, the U.S. produced 15.148 million bushels of corn compared to 2.310 million bushels of wheat. Additionally, there is almost 1.4 times more corn produced than wheat globally, with 1,065 million metric tons of corn harvested compared to 753 million metric tons of wheat.

The greater volume has also been reflected as greater interest for corn futures among options traders in the commodities market. CORN has also previously been the go-to among grains commodity-specific ETFs.

Gilbertie, though, argued that traders are growing more interested in WEAT for two reasons: greater awareness for agriculture-related investments and potentially supportive fundamentals.

For starters, consumers are more aware of wheat-related products in their everyday lives and would be then be more comfortable trading in the commodity, whereas corn is mostly used indirectly in many products.

“Even though people use much more corn in their daily lives than they do wheat, people are aware they are using wheat because they use it directly when consuming bread, pasta, bagels, pizza – basically anything with flour,” Gilbertie said. “They can see and feel and touch the wheat with almost every meal. Corn, on the other hand, is used indirectly in so many products from fuel (ethanol) to paper (held together with cornstarch) which makes people unaware of how much corn they actually use vs. how much wheat they actually use.”

Additionally, the U.S. is planting less wheat, and the diminished future supply could open an opportunity to capitalize on rising prices.

“The latest official estimates show the fewest United States wheat acres being planted since records began in 1919, which seems to have simulated some asset allocation into the wheat sector, where prices are very near decade lows and their cost of production but usage is near record high levels,” Gilbertie added.

For more information on the commodities market, visit our commodity ETFs category.

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