Agriculture ETFs Are Growing as China Returns to U.S. Markets

As part of an initial trade deal with the United States, China has been buying up agricultural goods, bolstering soft commodities like wheat and soybeans, along with related exchange traded funds.

Over the past month, the Teucrium Corn Fund (CORN) rose 2.7%, Teucrium Wheat Fund (NYSEArca: WEAT) gained 3.6% and Teucrium Soybean Fund (NYSEArca: SOYB) increased 4.9%. Meanwhile, U.S. wheat and soybean futures jumped to their highest level since summer 2018 and corn futures were moving toward an eight-week high, Reuters reports.

Traders were closely watching for more U.S. sales to China after the two countries agreed to a Phase 1 accord in an attempt to ease trade tensions. The protracted trade war previously slowed shipments of soybeans, sorghum, pork, and other agricultural products to China for over a year.

“You’ve got continued rumors that China’s going to buy both corn and wheat,” Jim Gerlach, president of broker A/C Trading, told Reuters.

Dealing In Beans

China, the world’s largest soybean importer, has pledged to raise purchases of U.S. farm goods as part of the initial trade deal. China has already bought 1 million metric tons of European Union wheat so far this season and could now look to U.S. suppliers under the new trade accord.

“The market is getting confident that China is going to make meaningful purchases,” Ole Houe, director of advisory services at brokerage IKON Commodities, told Reuters.

The U.S. Department of Agriculture revealed that export sales of U.S. wheat last week were 714,900 metric tons, or leaning toward the high end of expectations for 200,000 to 900,000 metric tons.

Further bolstering the market, concerns over unfavorable weather weighing global wheat production strengthened wheat futures. Traders also pointed out that expectations that commodity funds will buy wheat as they rebalance for 2020 also supported rising prices.

“Concerns of declining world production and lower U.S. acres are driving strength in wheat prices,” U.S. brokerage CHS Hedging said in a note.

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