One of the default plays over the last couple of years for combating inflation has been getting commodities exposure. Another rise in 2022 for the S&P GSCI index has supported this rise, making it another positive year for the space.
2022 was an especially volatile year due to Russia’s invasion of Ukraine during the first business quarter. Commodities have tempered since then, but the S&P GSCI index was still up for the year.
“The market standard commodities benchmark, the S&P GSCI, performed admirably in 2022, rising 26%, outpacing other commodities indices and asset classes, as well as defying higher interest rates and growing fears of a prolonged global economic slowdown, while high inflation provided a solid backdrop for one of the most inflation-sensitive asset classes,” a S&P Dow Jones Indices blog noted. “Commodities has been the best-performing major asset class for each of the past two years.”
When it came to agricultural commodities specifically, the macroeconomic backdrop coupled with harsh weather in Latin American countries like Argentina supported a rise in soybean prices. As mentioned, Russia’s invasion of Ukraine pushed commodities like wheat higher.
“An ongoing drought in top soybean meal exporter Argentina and less competition from alternative oils such as sunflower and palm supported soybean prices, with the S&P GSCI Soybean ending the year up 28.9%,” the blog added. “Wheat prices jumped to an all-time high following the Russian-Ukraine conflict (both major exporters of wheat). However, Black Sea exports picked up in the second half of the year, helped by a deal to create a safe shipping corridor for Ukrainian wheat and a record Russian harvest, ensuring that the S&P GSCI Wheat ended the year down 2.7%.”
Get Agricultural Commodities Exposure in 2023
The S&P GSCI index has risen about 9% over the past three years. If that trend persists, then another rise in the index for 2023 warrants commodities exposure.
For agricultural commodities 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.
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 fund includes the 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 analysis, visit the Commodities Channel.