Global food prices fell in 2023, although sugar hit record highs thanks to harsh weather conditions in certain producer countries. The dip in overall agricultural commodities could present investors with an opportunity to get exposure at value-oriented prices.
2022 saw record highs for food prices with the tailwind of geopolitical factors; namely, Russia’s invasion of Ukraine. With that factor dissipating in 2023 as inflation began to retreat as the year wore on, food prices started to retreat. This was reflected in data from the Food and Agriculture Organization (FAO).
‘The FAO Food Price Index, which tracks monthly changes in the international prices of commonly traded food commodities, was 13.7% lower last year than the 2022 average, but its measures of sugar and rice prices growing in that time,” ABC reported.
The effect of sugar prices was certainly felt by consumers during 2023’s holiday season. As ABC reported, the FAO’s “sugar index last year hit its highest level since 2011, expanding 26.7% from 2022 because of concerns about low supplies.”
As mentioned, harsh weather in the form of droughts was to blame for sugar-producing countries like India and Thailand. The sugar index started to retreat in December 2023 thanks to strong supply from Brazil.
Markets are expecting the Federal Reserve to loosen monetary policy in 2024. Using the commodity as an inflation hedge may not be its prime use, but can still sweeten a portfolio with diversification. If that’s the case, investors may want to take a look at the Teucrium Sugar ETF (CANE).
While there are exchange traded note options available, CANE is currently the only sugar ETF on the market. It’s accessible to investors who want a convenient way to get exposure to this commodity. And that’s whether it’s to hedge against inflation and/or to diversify a portfolio to get exposure to commodities uncorrelated to traditional assets like stocks or bonds.
Take Advantage of the Price Dip
Investors can take advantage of the price dip while getting diversification via a basket of commodities. This is all available with the Teucrium Agricultural Fund (TAGS). It is essentially a fund of funds that features a low 0.13% expense ratio. That’s beneficial in a time like now, when investors are more cost-conscious.
TAGS offers a perfect complement to a traditional 60/40 stock/bond portfolio with uncorrelated assets exposure, all in the convenience of one dynamic ETF. The fund combines exposure to Teucrium exchange traded funds focused on corn, wheat, soybeans, and sugar. Traders or long-term investors can focus on the fund for broad-based exposure or the individual funds for a more focused, concentrated approach in specific commodities.
The funds featured in TAGS:
- Teucrium Corn Fund (CORN)
- Teucrium Wheat Fund (WEAT)
- Teucrium Soybean Fund (SOYB)
- Teucrium Sugar Fund (CANE)
For more news, information, and analysis, visit the Commodities Channel.