The American heartland is seeing a boom while many other industries are facing busts. Amid high inflation and layoffs within such industries as technology, entertainment, media, and real estate, high commodities prices are a tailwind for the agriculture sector.
The U.S. Department of Agriculture forecasts net farm income to reach $160.5 billion in the calendar year 2022, up nearly 14% from 2021. This increased income for farmers has led to agricultural companies selling more seeds, fertilizer, and equipment. This expected increase is driven by increased costs for such commodities as corn, soybeans, and wheat. If this forecast from the USDA is realized, net farm income would be at its highest level since 1973.
“The farm economy tends to zig when the U.S. economy zags,” Kenneth Zuckerberg, a senior economist at CoBank, told the Wall Street Journal.
Meanwhile, Corteva CEO Chuck Magro said during a conference call that “low inventories, below-trend yields, high crop pricing… sets up the ag economy very, very well for 2023.”
This boom in the U.S. agriculture sector is bound to have an impact on the Neuberger Berman Commodity Strategy ETF (NBCM). Converted into an ETF in October, NBCM invests in commodity-linked derivatives with an active risk-balanced, diversified approach that seeks to minimize the effects of market volatility.
Tactical exposure adjustments expand potential alpha sources by considering top-down macro variables among commodity sectors, along with individual commodity outlooks to take advantage of short- and long-term opportunities.
The fully transparent active ETF’s fixed income holdings are actively managed and designed to preserve capital and serve as collateral for the ETF’s derivative positions while also seeking to generate additional yield. The fund will continue to be managed by Hakan Kaya, David Wan, and Michael Foster.
“Advisors have seen the benefits of adding in broad commodities ETFs into client portfolios in 2022 to offset the pressure of falling equity and bond prices,” said Todd Rosenbluth, head of research at VettaFi. “It’s exciting to watch Neuberger Berman further penetrate the ETF market given its strong brand and investment expertise.”
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