One of the key movers in agricultural commodities prices is the Black Sea Grain Deal, which Russia is threatening to abandon. An even bigger picture, however, is the global food crisis, which could potentially keep ag commodity prices afloat.
The default play is to assume that prices will rise if the Black Sea Grain Deal doesn’t extend. However, excess supply of grain from other countries could counter that potential price increase.
“Prices for some staple foods would likely rise but the situation is better than in the months after the war started due to improved supplies of grain from other producers such as Russia and Brazil,” Reuters reported.
As mentioned, the broader issue could be the bigger push when it comes to elevated commodities prices. An exacerbated global food crisis could provide the impetus that ag commodities need for a bullish push.
“The current global food crisis, however, is far from over,” Reuters added. “The WFP (World Food Programme) said last month that multiple emergencies had overlapped creating the largest and most complex hunger and humanitarian crisis in more than 70 years.”
More light was shed on the crisis in the initial stages of Russia’s invasion of Ukraine in 2022. The crisis was already brewing ahead of the invasion as “a record 349 million people experienced acute hunger and 772,000 teetered on the edge of famine, the WFP said in an annual review,” per the same Reuters report.
Ag Commodities Fund Could Push Higher
Traders erring on the side of bullishness for ag commodities can look at the Teucrium Agricultural Fund (TAGS) for opportunities. TAGS is essentially a fund of funds, and it features a low 0.13% expense ratio.
It combines exposure to Teucrium exchange traded funds (ETFs) focused on corn, wheat, soybeans, and sugar. Traders or long-term investors have the opportunity to focus on TAGS for broad-based exposure or the individual funds for a more focused, concentrated approach in specific commodities.
The funds featured in TAGS:
- The Teucrium Corn Fund (CORN)
- The Teucrium Wheat Fund (WEAT)
- The Teucrium Soybean Fund (SOYB)
- The Teucrium Sugar Fund (CANE)
For more news, information, and analysis, visit the Commodities Channel.