What goes up must eventually come down, but exactly when? Of course, the markets are difficult to time, but when it comes to commodities, which have been broadly outperforming the major stock market indexes, it could be some time before their overall strength subsides.
Market experts are already seeing commodity prices start to dip. That, however, doesn’t necessarily mean that commodities will see a broad sell-off similar to technology stocks through the first half of 2022.
“In the short term, the answer is no,” said portfolio manager Lisa Thompson, “The market has overreacted, and we’re already seeing prices come back down a bit. But, compared to where we were a year ago, commodity prices are significantly higher — and I do think that’s a durable trend.”
“Over the long term,” Thompson added, “prices are likely to remain elevated due to a number of factors, including rising demand, supply shortages and deglobalisation forces symbolised by the war in Ukraine and strained US-China relations. Higher prices should be expected in a world where free and open trade is in retreat.”
2 Ways to Get Commodities Exposure
Getting exposure to commodities doesn’t mean investors have to hold various positions. They can have it all in the convenience of an exchange traded fund (ETF): the Teucrium Agricultural Fund (TAGS). The fund combines exposure to corn, what, soybean, and sugar through other Teucrium ETFs that focus specifically on these commodities, essentially offering investors a fund of funds.
Funds features in TILL:
- Teucrium Corn Fund (CORN)
- Teucrium Wheat Fund (WEAT)
- Teucrium Soybean Fund (SOYB)
- Teucrium Sugar Fund (CANE)
On the other hand, another fund to consider is the Teucrium Agricultural Strategy No K-1 ETF (TILL), which provides investors with long-only futures price exposure to corn, wheat, soybeans, and sugar. One difference with TILL is it does not issue a K-1 tax form, but rather a 1099 form.
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 compared to TAGS.
For more news, information, and strategy, visit the Commodities Channel.