Agricultural Commodities Could Face a Volatile Summer

Agricultural commodities could see a volatile summer, which opens opportunities for short-term traders, particularly if a bullish backdrop ensues.

A confluence of factors, namely geopolitical and meteorological, could make for a volatile ride for the agricultural commodities market. The Russia-Ukraine conflict remains at the forefront of geopolitical catalysts, but the influence of weather is always lurking in the background.

Of course, it’s difficult to mention anything market-related these days without addressing central bank policy amid relatively high inflation. While the U.S. Fed is on a pause with respect to rate hikes, more could potentially be on the way in an effort to tamp down inflation.

“While the global economic outlook remains uncertain and closely linked to inflation trends and central bank monetary policy decisions, our concerns about agricultural commodities were reinforced in Q2 2023,” a Market Screener report noted. “High production costs, trade tensions and increased weather risks will continue to weigh on global agricultural production in the months ahead.”

“Finally, the increasing frequency of climatic and meteorological anomalies will only increase the volatility of agricultural commodity prices. In the northern hemisphere, the current early periods of intense heat and the significant water deficit will affect cereal yields (wheat, corn) until the end of the year,” the report added, noting that sugar, wheat, corn, and cocoa are already seeing price increases.

Investors looking to get commodities exposure to position themselves for a potential summer surge can get broad exposure with exchange traded funds (ETFs). They offer easy ingress into agricultural commodities via a dynamic investment vehicle that benefits all investors.

Get Broad Exposure With TAGS

Short-term traders or long-term investors who want an all-encompassing approach can use the Teucrium Agricultural Fund (TAGS), which is essentially a fund of funds, and it features a low 0.13% expense ratio. It combines exposure to corn, wheat, soybeans, and sugar through other Teucrium funds that focus specifically on these commodities.

The funds featured in TAGS:

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

Of course, 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.