Tighter Supply in Grains Could Push Ag Commodities Higher

Supply disruptions are helping to keep agricultural commodities afloat. Further constraints in production of grains could even reverse the current downtrend, pushing prices higher in the long run.

Futures activity in wheat, corn, and soybeans in the past week revealed an uptick in prices, with the trend in the longer term potentially pushing higher if tighter supply conditions persist.

“Global grain supplies will be tighter in the coming season, setting the stage for higher prices for agricultural commodities as economies are still coping with stubborn inflation, according to a key US forecast,” a Bloomberg report said.

In other parts of the globe, harsh weather conditions could also add tailwinds for higher ag commodities prices. Brazil, in particular, is experiencing torrential rainfall that’s causing flooding and thus, threatening supply conditions.

“Heavy flooding in southern Brazil has hit food storage facilities in lower areas while hampering the shipping of grains to port, jeopardizing the nation’s exports and wreaking havoc to the economy of Rio Grande do Sul state, a large soy, rice, wheat and meat producer,” reported Reuters.

If these factors continue to weigh heavily on supply production, then the Teucrium Agricultural Fund (TAGS) can certainly benefit. The fund offers easy ingress to ag commodities exposure that can benefit both the long- and short-term investor.

Ideal for Long- or Short-Term Investment

For the long-term investors looking to diversify their portfolios with assets that are uncorrelated with the broad market, TAGS offers a perfect complement to a traditional 60/40 stock/bond portfolio in the convenience of one dynamic ETF. The fund combines exposure to Teucrium funds focused on corn, wheat, soybeans, and sugar.

Short-term traders can also use TAGS to play the volatility of ag commodities prices. As opposed to holding various futures positions in a variety of commodities, TAGS can capture this broad exposure via one fund.

TAGS presents itself as a compelling option given its low 0.13% expense ratio. That makes it an ideal option for cost-conscious investors in the current macroeconomic environment. The fund is an ideal way for ingress into agricultural investing by combining various Teucrium funds that represent commodities. Furthermore, 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:

For more news, information, and analysis, visit the Commodities Channel.