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Agricultural ETFs Stayed Strong in February

Sanghamitra Saha
Wall Street finished in the green reversing its five-day negative trend on Thursday following news that United States and China have ramped up their efforts to resolve lingering trade disputes

The month of February was moderate for agricultural commodities as evident from the 1% one-month gain (as of Feb 27, 2018) in the broader soft commodity PowerShares DB Agriculture ETF DBA. A subdued greenback and a crash in the equity as well as bond market turned the tide for soft commodity exchange-traded products (read: A Tale of Two Currencies and The ETF Impact).

Increasing inflationary expectations and rising rate fears pushed up bond yields and possibilities of faster ceases in cheap money inflows, spurring the equity selloff. While the likelihood of a stronger U.S. dollar in the wake of faster Feb rate hike bets can spoil the party for agricultural commodities going forward, cheaper valuation and some grain-specific factors may provide support to a few agricultural ETF/ETN investing.

Below we highlight the agricultural ETFs that held their head high in February and beat the returns provided by SPDR S&P 500 ETF SPY (down 3.6%) in the last one month (as of Feb 27, 2018).


As per an article published on Reuters, cocoa prices should gain strength by the end of the year, improving after two successive annual declines. Constricting supplies are the reason behind this bet. 

Cocoa prices nosedived in 2016 and 2017 as the global market was in surplus thanks to surging output in West Africa and lack of demand. But prices are getting sweetened lately with the market gearing to a four-month high.

Dry weather is likely to hurt the crop in Ivory Coast, the world’s largest producer of cocoa beans. Notably, 70% of the global output hails from West African nations like Ghana and Ivory Coast. Plus, worries about diseases like cacao swollen shoot virus hurting production pushed up prices in recent trading. iPath Bloomberg Cocoa SubTR ETN NIB and iPath Pure Beta Cocoa ETN CHOC added about 13.9% and 12.2% in the last one month (as of Feb 27, 2018) (see all agricultural ETFs here).


Teucrium Wheat ETF WEAT is benefiting from droughts in the U.S. Plains, Argentina and in west Africa. The worst drought in years hurt wheat crops from Kansas to Texas which is why wheat ETF scored big in February. The fund gained about 3.7% in the last one month (as of Feb 27, 2018).

Other Grains

Among other funds, ELEMENTS Linked To The MLCX Grains Index - Total Return GRU (up 4%), iPath Pure Beta Agriculture ETN DIRT (up 5.5%), iPath Bloomberg Grains Subindex Total Return ETN JJG (up 4.7%) and iPath Bloomberg Agriculture SubTR ETN JJA (up 3.8%) also remained steady in February. These funds have high exposure to corn, soybean and wheat.

Thanks to dry weather in Argentina, soybean prices were in great shape lately. Plus, consumption status is also high right now. The pace of domestic soybean crush ran approximately 2.7% higher in February than last year’s pace through December. Corn prices gained on expectations that the United States will export more crop as its biggest competitor Argentinia’s output has been suffering for weather issues.

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SPDR-SP 500 TR (SPY): ETF Research Reports
PWRSH-DB AGRIC (DBA): ETF Research Reports
ELEMT-MLCX GRNS (GRU): ETF Research Reports
IPATH-BB GRNS (JJG): ETF Research Reports
IPATH-PB COCOA (CHOC): ETF Research Reports
TEUCRM-WHEAT FD (WEAT): ETF Research Reports
IPATH-BB COCO (NIB): ETF Research Reports
IPATH-BB AGG (JJA): ETF Research Reports
IPATH-PB AGRICL (DIRT): ETF Research Reports
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