With COVID-19, inflation, rising interest rates, and recession fears, it’s no wonder that the CBOE Volatility Index (CBOE) is up 39% within the last five years. That said, investors can look to agricultural commodities to help pad their portfolios to absorb any further volatility shock.
Investorplace noted that agricultural stocks have been on the rise, which also provides an effective hedge against inflation. With geopolitical concerns adding to a global food crisis and harsh climate conditions, this paves the way for further price increases.
“With damaging winter wheat crop prospects impacting areas from Argentina to southern Europe and from the U.S. to North Africa, the supply of core goods will probably be strained,” the Investorplace article said. “Again, it’s not a holistically uplifting narrative. However, the wildness of the events associated with the new normal may keep these agriculture stocks running for a while.”
In the meantime, this should continue to apply upward pressure on food prices. This certainly isn’t welcome news to consumers as the U.S. Department of Agriculture predicts that prices will rise 8% over 2022 rates, which is not as drastic of an increase compared to 2022, but still another headache amid hot inflation.
TAGS: Convenient Commodities Exposure
As mentioned, investors can help pad their portfolios with exposure to ag commodities as the rising tide of interest rates continues. Stubborn inflation should keep monetary policy tight as the Fed continues to wrestle with interest rate policy without spinning the economy into a recession.
For easy, convenient broad-based exposure, consider the Teucrium Agricultural Fund (TAGS). It offers an ideal option to get ag commodities exposure without having to hold various commodities for diversification purposes.
TAGS is essentially a fund of funds, and it features a low 0.13% expense ratio, combining exposure to corn, wheat, soybeans, and sugar through other Teucrium funds that focus specifically on these commodities.
Below are the funds featured in TAGS:
- The Teucrium Corn Fund (CORN)
- The Teucrium Wheat Fund (WEAT)
- The Teucrium Soybean Fund (SOYB)
- The Teucrium Sugar Fund (CANE)
If investors want specific exposure to a particular commodity, such as corn, wheat, soybeans, or sugar, they can invest in those funds individually.
For more news, information, and analysis, visit the Commodities Channel.