Wall Street Analysts Are Placing Bets on Higher Commodity Prices

Commodities exposure has been one of the primary go-to plays amid rising inflation, but the wind has gone out of the sails recently. However, Wall Street analysts see this as a temporary pullback and are ramping up bets on a commodities rally to hit before the end of the year.

“Commodities have broadly pulled back from their recent peaks, but Wall Street analysts say the fundamentals are pointing to another rally by year-end,” a CNBC report confirmed, noting that the UBS CMCI (Constant Maturity Commodity Index) fell 11% from its peak in early June and was relatively flat in July.

“In a research note Friday, UBS Global Wealth Management strategists said the supply-side constraints that underpinned the surge in commodity prices in the first half of the year had taken a backseat to the deteriorating outlook for global economic growth, a strengthening dollar, and China’s housing predicament,” CNBC added.

Despite the recent challenges, however, conditions could be improving that could make way for a commodities rally before the year’s end.

“In general, commodity supply is constrained due to years of underinvestment — official inventories are low across multiple sectors — and because of weather-related and geopolitical factors. Meanwhile, we see positive demand trends,” said BS GWM Chief Investment Officer Mark Haefele.

Agricultural Exposure: 2 ETF Options

Investors looking to get commodities exposure can consider a pair of exchange traded funds (ETFs) from Teucrium. Getting exposure via ETFs means that investors don’t have to hold various positions to get diversification in commodities.

Investors can have it all in the convenience of one ETF: the Teucrium Agricultural Fund (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.

Funds featured in TILL:

  1. The Teucrium Corn Fund (CORN)
  2. The Teucrium Wheat Fund (WEAT)
  3. The Teucrium Soybean Fund (SOYB)
  4. The Teucrium Sugar Fund (CANE)

Another fund to consider is the Teucrium Agricultural Strategy No K-1 ETF (TILL), which provides investors with long-only futures price exposure to corn, wheat, soybeans, and sugar. One difference with TILL is that it does not issue a K-1 tax form, but rather a 1099 form.

TILL will hold one futures contract in each of the four markets (corn, wheat, soybeans, and sugar) excluding the front-month (aka spot) contract. TILL is also an actively managed fund, giving investors more dynamic exposure to the markets than that of TAGS.

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