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Agriculture ETFs - Up, Up, and Away?

Jul 7, 2008
Commodity ETFs (exchange traded funds) seem to be doing well, but agriculture ETFs are doing better than well. Over all of the exchange traded funds on the market one in particular is flying high. PowerShares DBA ETF has shown more than 50% return since January, 2007, when this ETF was introduced. During the same period S&P 500 was down more than 5%. DBA is one of several agriculture ETFs out there and they all seem to be performing.

There seems to be a trend that agriculture exchange traded funds goes up when stock market declines, according to the analysts. Based on this performance, would hedging your portfolio with agriculture ETFs make sense? That really depends on your prediction of the stocks you own and whether you think they are doing well enough on their own. If you see the stock market in decline, it may be worth your while to take a look at commodity ETFs, particularly agriculture.

Supply and demand for agricultural products is the key to why these commodity ETFs are doing so well. The demand for crops around the world, particularly in China and India is very high, and they are getting their supplies shipped in because they cannot keep up or they are predicting a future need. China has the Olympics coming up and have been seemingly stocking up on wheat. Better health education around the world is causing a higher demand for grains. Corn is on the rise for feed. Even sugar is in higher demand, maybe because of the effect recent weather has had on global crops.

Agriculture ETFs are about predicting the future and the experts are seeing this rise in agriculture exchange traded funds as ongoing. Consumers might not be happy about the price of oil causing the rising costs at the grocery stores. Nobody wants to see that these crazy weather anomalies seemingly caused by global warming causing so much disaster. But commodity agriculture ETF investors are certainly able to look at the silver lining in these clouds.

Even the analysts cannot predict the future, though some of them seem to do a pretty good job of trying. But they are saying that the future looks good for commodity ETFs, and agriculture exchange traded funds in particular are getting an expert nod. If you got in on the agriculture game by purchasing some DBA exchange traded funds back when it was introduced in January, 2007, then you already know what an agriculture ETF can do for your portfolio. If you haven't given commodity ETFs a try yet, maybe now is the time.

You are the only one who can decide which investments are right for you. Only you know what your portfolio looks like and whether the ever dropping S&P 500 is doing for you and whether you need something in there that will counteract it. Take the time to study up on agriculture exchange traded funds. They could be the boost your portfolio needs. You may not have to be as concerned about your other stocks if you have some commodity ETFs to back them up.
About the Author
Ryan helps you understand commodity ETFs and shows you how to profit from agriculture ETFs.
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