An agriculture-related exchange traded fund, Market Vectors Agribusiness (NYSEArca: MOO), has gained traction as the current weather in South America has damaged soybean and corn crops.
Longer-term, the ETF has been caught in a downtrend but recently broke above its 200-day moving average. Market Vectors Agribusiness was a top ETF seller in 2011, gathering net inflows of about $3.7 billion for the year, according to ETF Industry Association data.
The largest holding in MOO, Monsanto (NYSE: MON), exceeded analysts expectations in the most recent quarter.
“As food prices surge around the world it should create renewed interest in agriculture and suppliers to agriculture. Increased food prices and larger margins will allow producers to reinvest into more efficient equipment, benefiting suppliers. Additionally, the shift to biofuels is increasing demand for agricultural equipment and chemicals,” according to The Motley Fool.
Apart from crop production, farming suppliers are one of the world’s fastest-growing industries. As populations grow and emerging markets grow richer, farmers will have to maximize crop yields and use proper fertilizers to maintain growth condition, reports David gillie for ETF Digest, on The Street.
Dry weather continues to plague South America. Many soybean and corn crops have been ruined, creating a supply shortage. Corn, coffee, soybeans and sugar may also be affected. [Investors Shovel Cash into Agribusiness ETF]