China's Re-Opening Could Give Commodities a Boost | ETF Trends

The capital markets are looking at China with eyes wide open, searching for opportunities as the country’s economy bounces back after stumbling over the last couple of years. A byproduct of the recent re-opening after a resurgence of COVID-19 cases could be a boost in commodities.

As the world was continuing to battle the pandemic, China was also hit with a real estate crisis in 2021 that caused a significant hit to its economy. In the meantime, the government was laying the regulatory hammer down on big tech in order to curb monopolies and prevent tech companies from gaining too much power, given their exponential growth during the pandemic.

As mentioned, a resurgence of COVID-19 in 2022 was coupled with rising global inflation, causing a double whammy for economic growth. With the economy re-opening from lockdown restrictions, that should be a positive for commodities demand moving forward.

“As China reopens and economic activity increases progressively, we expect evident signs of robust demand for commodities by Q2 2023,” Hynes and Kumari of ANZ Research said.

Get Commodities Exposure in a Single ETF

Investors looking to add a touch of diversification to their portfolios with agricultural commodities don’t have to settle for a specific commodity. They 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)

Additionally, if investors do want to concentrate their exposure to a specific commodity, any of the aforementioned funds are available individually. Another fund to consider for tax-specific purposes is the Teucrium Agricultural Strategy No K-1 ETF (TILL).

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.

For more news, information, and analysis, visit the Commodities Channel.