Recession fears continue to amplify in the capital markets, but this could push commodities higher, particularly those of the agricultural variety.
The U.S. Federal Reserve has been in a dogfight with inflation, and it’s proving to be a long-term battle. Persistent inflation has been forcing the Fed to hike interest rates, which could come at the expense of economic growth.
At times like this, investors will want to seek safe haven commodities such as gold. A recent FX Empire article, however, called agricultural commodities “one of the best kept secrets.”
“Unlike other commodities, the world cannot function or survive without agriculture,” the article said. “Regardless of whether the overall economy is in a recession or booming, people still have to eat – making Agriculture both recession-proof and crisis-proof. These unique features have positioned Agriculture as one of the hottest asset classes of 2023.”
Among the top-performing commodities thus far have been orange juice, coffee, and cocoa. Sugar has also been pushing higher, quadrupling so far this year and soaring to new highs every month.
“The World Bank predicts, Agricultural Commodities could still surge another 240% from current levels and remain elevated well into 2026,” the article mentioned. “We’re just over a quarter way into 2023 and it has already been a massive year Commodities – but this could just be the beginning of the markets best year ever since the Global Financial Crisis in 2008.”
Add Broad Commodities Exposure
As the Fed continues to deal with inflation, agricultural commodities have offered the ideal inflation hedge. Even with a recession in tow, as the article mentioned, it shouldn’t tamp down demand for ag commodities.
Given this, for easy, convenient broad-based exposure, consider the Teucrium Agricultural Fund (TAGS). It offers an ideal option to get agricultural commodities exposure without having to hold various commodities for diversification purposes.
TAGS is essentially a fund of funds, and it features a low 0.13% expense ratio, combining exposure to corn, wheat, soybeans, and sugar through other Teucrium funds that focus specifically on these commodities.
Below are 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)
If investors want specific exposure to a particular commodity, such as corn, wheat, soybeans, or sugar, they can invest in those funds individually.
For more news, information, and analysis, visit the Commodities Channel.