A Drop in Prices Could Mean Value for This Agriculture ETF | ETF Trends

The party for lower food prices may only be short-lived. Data from the United Nations’ Food and Agriculture Organization (FAO) revealed that food prices fell during the month of July, but the organization only sees this respite as temporary.

FAO data showed that food prices fell 8.6% during the month of July. That’s a marked increase compared to the 2.3% drop in June.

“Many uncertainties remain, including high fertilizer prices that can impact future production prospects and farmers’ livelihoods, a bleak global economic outlook, and currency movements, all of which pose serious strains for global food security,” FAO chief economist Maximo Torero said.

As such, investors could be sensing a value play with exchange traded funds (ETFs) such as the Teucrium Agricultural Strategy No K-1 ETF (TILL). The fund has been seeing strong inflows, including about $65 million coming into the fund on Monday, August 8.

As of close on August 5, the fund already had inflows of $4.66 million bring total assets to about $70 million. Traders could be forecasting another run-up in food prices, confirming the upward trend of more inflation.

TILL provides investors with long-only futures price exposure to corn, wheat, soybeans, and sugar. One defining feature of TILL is that it does not issue a K-1 tax form, but rather a 1099 form, allowing investors to be taxed directly as individuals.

TILL will hold one futures contract in each of the four markets (corn, wheat, soybeans, and sugar), excluding the front-month (aka spot) contract. TILL is also an actively managed fund, giving investors more dynamic exposure to the markets.

“Today’s flows confirm our thesis that investors are looking to allocate to agriculture and that some prefer to hold funds that do not issue K-1s,” said Jake Hanley, managing director and senior portfolio strategist at Teucrium, in an email. “The timing suggests that investors may be looking to take advantage of the recent pull back in agricultural prices.”

An All-in-One Approach

In addition to TILL, investors can opt for a passive approach to getting all-in-one exposure to agriculture using the Teucrium Agricultural Fund (TAGS). The fund, which features a low 0.13% expense ratio, combines exposure to corn, wheat, soybeans, and sugar through other Teucrium ETFs that focus specifically on these commodities, essentially offering investors a fund of funds.

Funds featured in TILL:

  1. The Teucrium Corn Fund (CORN)
  2. The Teucrium Wheat Fund (WEAT)
  3. The Teucrium Soybean Fund (SOYB)
  4. The Teucrium Sugar Fund (CANE)

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