The research group, Economic Intelligence Unit (EIU), doesn’t see commodity prices falling after a volatile 2022. According to EIU, while demand may slow, supply won’t rise high enough to put enough downward pressure on prices.
“EIU expects commodity prices to recede in 2023 in the face of slowing demand globally, but an only limited increase in supply means that prices will remain high in level terms,” the research group noted in a commodities outlook for 2023.
“Global supply-chain disruptions stemming from the covid-19 pandemic will subside in 2023,” they added. “Along with increasing production volumes of agricultural commodities, this will cause a drop of 8.6% in our food, feedstuffs and beverages index next year.”
The Dow Jones Commodity Index Agriculture Capped Component, which is designed to track the agriculture sector through futures contracts (with capping rules applied), has been on an upward trajectory over the past three years. The index is up over 60% and could see more gains in 2023 should that trend hold steady.
“Prices of grains have eased from their recent highs, but their direction in the coming months will continue to be influenced by events in the Black Sea region, in particular by any further extensions of an agreement that allows Ukrainian wheat exports to transit via Black Sea shipping corridors despite the Russian blockade of Ukrainian ports,” the EIU said.
Get Broad Commodities Exposure
To play continued upside in agricultural commodities, consider a broad-based exchange traded fund (ETF) such as the Teucrium Agricultural Fund (TAGS). Whether it’s for a continued inflation hedge or to simply diversify a portfolio with more alternative assets as commodity prices push higher, a broad-based fund like TAGS is worth considering.
For investors looking for agriculture exposure who don’t know where to start, Teucrium can fill a void, offering investors an easy solution. Getting exposure to commodities doesn’t mean investors have to hold various positions.
Investors can have it all in the convenience of TAGS. The fund 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.
“The Teucrium Team has over 70 years of combined trading experience,” Teucrium noted on its website. “Since our founding in 2010 Teucrium has exclusively offered access to alternative markets through ETFs. We revolutionized the way commodity ETFs are structured by tailoring our funds according to the unique characteristics of each underlying market.”
For more news, information, and analysis, visit the Commodities Channel.