In a market environment where inflation hedging is a must, energy has been one of the go-to sectors as stocks and bonds languish amid rising consumer prices. However, energy can’t have all the fun.
Amid rising food prices, the Invesco DB Agriculture Fund (DBA) is up 12% for the year. DBA is a combination of futures within several areas of agriculture, including wheat, soybeans, coffee, corn, cattle, cocoa, sugar, hogs, and cotton.
It invests in a diversified basket of various agricultural natural resources and seeks to track changes in the level of the DBIQ Diversified Agriculture Index Excess Return plus the interest income from its holdings of primarily U.S. Treasury securities and money market income. The index is a rules-based index composed of futures contracts on some of the most liquid and widely traded agricultural commodities. The fund and the index are rebalanced and reconstituted annually in November.
U.S. President Looks to Bolster Agriculture Production
U.S. president Joe Biden is looking to bolster agriculture production in the wake of Russia’s invasion of Ukraine, which has reduced food exports. Biden noted that the invasion has added a double whammy to rising consumer prices in food staples.
“Right now, America is fighting on two fronts,” Biden told the crowd assembled at the farm. “At home, it’s inflation and rising prices. Abroad, it’s helping Ukrainians defend their democracy, and feeding those who are left hungry around the world because Russian atrocities exist.”
To address food shortages, the Biden administration is looking to increase the number of counties eligible for insurance for double cropping. The process involves planting a second crop on the same land within the same year.
“Double cropping comes with real risks,” Biden said. “If the weather conditions aren’t ideal, or at least good … then the timing of everything is thrown off.”
“But it’s a risk we need to take,” Biden added. “That’s why my administration is looking at how to extend crop insurance coverage to give financial security to farmers.”
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