Soybean ETF May Be Digging Out of Its Long-Term Bottom

Soybean futures and related exchange traded fund have been among the weaker performing agricultural commodities over recent years, but things may be turning around.

The Teucrium Soybean Fund (NYSEArca: SOYB) is down 5.1% year-to-date and has returned an average annualized -7.1% over the past three years. SOYB holds a mix of three different soybean futures contracts, including the second-to-expire contract at 30%, the third-to-expire contract weighted at 30%, and the contract expiring in the March following the expiration month of the third-to-expire contract at 35%.

After the long-term underperformance, soybean prices may have experienced a long-term bottom and the market could begin to turn around on basic economic fundamentals of supply and demand.

“Absent higher soybean prices, demand is likely to continue to exceed supply. Unchanged for the past three years, prices favor consumption over production. Net 2017 soybean revenue for U.S. farmers has tipped negative, reducing their incentive to plant bean crops,” Mike McGlone, senior analyst at Bloomberg Intelligence, said in a note.