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4 Agricultural Commodity ETFs Surging Double Digits in May
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Agricultural commodities are surging this month buoyed by bad weather conditions that wreaked havoc in the major growing regions of the crops, delaying the crop plantations.
According to the latest U.S. Department of Agriculture’s (USDA) weekly crop report, farmers were able to plant 63% of their intended corn acres as of May 27 while soybean planting was seen at 31%. The five-year averages for late May are 90% for corn and 66% for soybeans (read: 4 High-Dividend ETF Winners Amid May's Trade Tantrum).
In particular, corn prices jumped to the highest level since July 2017 given record slow plantings following the storms that battered the Great Plains and Midwest. The forecast for more heavy rains across the region has threatened further delay in plantation. Wheat also rose to its highest price since February 2019 on supply-side concerns with reports showing that the China’s harvests may be affected by heavy rainfall along the Yangtze and Han rivers. With the latest surge, wheat is poised for the biggest monthly gain in two years. Meanwhile, soybean is also seeing strength in its prices and is poised for further gains in the days ahead.
Above-normal rainfall is expected across most of the Midwest and Plains farm belt over the next 15 days that will further delay planting of corn and soybeans and would potentially damage the quality of the developing winter wheat crop.
Given this, we have highlighted four agricultural ETFs that have gained in double digits this month and will continue to rise should the same trends persist (see: all the Agricultural ETFs here).
This fund provides exposure to the wheat market in a unique way and reduces the effects of both contango and backwardation. It uses three futures contracts for wheat, all of which are traded on the CBOT Futures Exchange. The three contracts include the second-to-expire contract, weighted 35%; the third-to-expire contract, weighted 30%; and the contract expiring in the December following the expiration month of the third-to-expire contract, weighted 35%. The fund has amassed $58 million in its asset base and trades in a good volume of about 133,000 shares a day. The product is a high-cost choice in the agricultural space as it charges a fee of 1.16% per year. It has surged 13.8% in a month and has a Zacks ETF Rank #4 (Sell) with a High risk outlook.
MLCX Grains ETN
This ETN is Linked to the ICE BofAML Grains Index - Total Return, which is designed to provide investors with an index for the grains sector and for investment in commodities as an asset class. The index comprises futures contracts on four physical commodities: corn, soybeans, soybean oil and wheat. Among these components, weightings are heaviest in wheat and are then followed by corn and then soybeans and finally soybean oil. GRU has accumulated $3.2 million in its asset base and charges 75 bps in annual fees. It trades in average daily volume of 1,700 shares and has gained 10.8% in a month. The note has a Zacks ETF Rank #5 (Strong Sell) with a High risk outlook.
iPath Bloomberg Grains Subindex Total Return ETN
The product follows the Bloomberg Grains Subindex Total Return, which delivers returns through an unleveraged investment in three futures contracts on grains commodities – soybeans, corn and wheat. The ETN has been able to manage $27.6 million in AUM and trades in a paltry volume of roughly 4,000 shares per day. Expense ratio comes in at 0.75%. JJG is up 10.5% in a month and has a Zacks ETF Rank #5 with a High risk outlook (read: Markets & ETFs Digest Trade Spat: Is It a Dead-Cat-Bounce?).
This ETF provides investors unleveraged direct exposure to corn without the need for a futures account and thus reduces the effects of both contango and backwardation. It uses three futures contracts for corn, all of which are traded on the CBOT Futures Exchange. The three contracts include the second-to-expire contract, weighted 35%; the third-to-expire contract, weighted 30%; and the contract expiring in the December following the expiration month of the third-to-expire contract, weighted 35%. CORN has accumulated $69.2 million and trades in average daily volume of 59,000 shares. It has 1.11% in expense ratio and has gained 10.3% in a month. The fund has a Zacks ETF Rank #5 with a High risk outlook.
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4 Agricultural Commodity ETFs Surging Double Digits in May
Agricultural commodities are surging this month buoyed by bad weather conditions that wreaked havoc in the major growing regions of the crops, delaying the crop plantations.
According to the latest U.S. Department of Agriculture’s (USDA) weekly crop report, farmers were able to plant 63% of their intended corn acres as of May 27 while soybean planting was seen at 31%. The five-year averages for late May are 90% for corn and 66% for soybeans (read: 4 High-Dividend ETF Winners Amid May's Trade Tantrum).
In particular, corn prices jumped to the highest level since July 2017 given record slow plantings following the storms that battered the Great Plains and Midwest. The forecast for more heavy rains across the region has threatened further delay in plantation. Wheat also rose to its highest price since February 2019 on supply-side concerns with reports showing that the China’s harvests may be affected by heavy rainfall along the Yangtze and Han rivers. With the latest surge, wheat is poised for the biggest monthly gain in two years. Meanwhile, soybean is also seeing strength in its prices and is poised for further gains in the days ahead.
Above-normal rainfall is expected across most of the Midwest and Plains farm belt over the next 15 days that will further delay planting of corn and soybeans and would potentially damage the quality of the developing winter wheat crop.
Given this, we have highlighted four agricultural ETFs that have gained in double digits this month and will continue to rise should the same trends persist (see: all the Agricultural ETFs here).
The Teucrium Wheat Fund (WEAT - Free Report)
This fund provides exposure to the wheat market in a unique way and reduces the effects of both contango and backwardation. It uses three futures contracts for wheat, all of which are traded on the CBOT Futures Exchange. The three contracts include the second-to-expire contract, weighted 35%; the third-to-expire contract, weighted 30%; and the contract expiring in the December following the expiration month of the third-to-expire contract, weighted 35%. The fund has amassed $58 million in its asset base and trades in a good volume of about 133,000 shares a day. The product is a high-cost choice in the agricultural space as it charges a fee of 1.16% per year. It has surged 13.8% in a month and has a Zacks ETF Rank #4 (Sell) with a High risk outlook.
MLCX Grains ETN
This ETN is Linked to the ICE BofAML Grains Index - Total Return, which is designed to provide investors with an index for the grains sector and for investment in commodities as an asset class. The index comprises futures contracts on four physical commodities: corn, soybeans, soybean oil and wheat. Among these components, weightings are heaviest in wheat and are then followed by corn and then soybeans and finally soybean oil. GRU has accumulated $3.2 million in its asset base and charges 75 bps in annual fees. It trades in average daily volume of 1,700 shares and has gained 10.8% in a month. The note has a Zacks ETF Rank #5 (Strong Sell) with a High risk outlook.
iPath Bloomberg Grains Subindex Total Return ETN
The product follows the Bloomberg Grains Subindex Total Return, which delivers returns through an unleveraged investment in three futures contracts on grains commodities – soybeans, corn and wheat. The ETN has been able to manage $27.6 million in AUM and trades in a paltry volume of roughly 4,000 shares per day. Expense ratio comes in at 0.75%. JJG is up 10.5% in a month and has a Zacks ETF Rank #5 with a High risk outlook (read: Markets & ETFs Digest Trade Spat: Is It a Dead-Cat-Bounce?).
The Teucrium Corn Fund (CORN - Free Report)
This ETF provides investors unleveraged direct exposure to corn without the need for a futures account and thus reduces the effects of both contango and backwardation. It uses three futures contracts for corn, all of which are traded on the CBOT Futures Exchange. The three contracts include the second-to-expire contract, weighted 35%; the third-to-expire contract, weighted 30%; and the contract expiring in the December following the expiration month of the third-to-expire contract, weighted 35%. CORN has accumulated $69.2 million and trades in average daily volume of 59,000 shares. It has 1.11% in expense ratio and has gained 10.3% in a month. The fund has a Zacks ETF Rank #5 with a High risk outlook.
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Zacks’ free Fund Newsletter will brief you on top news and analysis, as well as top-performing ETFs, each week. Get it free >>