Despite an uncertain market environment, the agricultural sector is weathering the inflation storm with help from a food supply shortage as well as other external forces. In essence, the push of inflation is countered by an even stronger pull of rising commodities prices.
“Though rising inflation has prompted the Federal Reserve to continue increasing interest rates into next year, agriculture lender CoBank said in a quarterly report released Monday the ag sector is weathering inflation and benefiting from a commodity shortage that has created pricing power,” a Progressive Farmer report said.
CoBank noted that additional tailwinds for agricultural commodities stem from the ongoing conflict in Ukraine. Also, consumer spending remains high despite the forces of inflation.
“To date, there is no solid evidence that inflation is on a steep downward path and there is also little evidence that higher rates are severely damaging the economy,” Dan Kowalski, vice president of CoBank’s Knowledge Exchange, said in a news release.
“Ultimately, to get inflation levels down, the willingness or ability of consumers and businesses to spend must also come down,” Kowalski added. “That means rate hikes will continue until the Fed achieves its mandate of price stability. Unfortunately, that increases the likelihood of collateral damage coming in the first half of 2023.”
Broad-Based Commodities Exposure
Investors looking to gain commodities exposure can look to exchange traded funds (ETFs) for easier access. Specifically, consider 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. When it comes to commodities exposure, most investors may think of oil, but agricultural exposure can also provide more commodities diversification.
For investors looking for agriculture exposure who don’t know where to start, this is where 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 fund includes the aforementioned Teucrium Wheat Fund (WEAT). To get that broad exposure, TAGS also includes the Teucrium Corn Fund (CORN), the Teucrium Soybean Fund (SOYB), and the Teucrium Sugar Fund (CANE).
For more news, information, and strategy, visit the Commodities Channel.