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Agriculture ETFs Could be Ready to Shed Sluggish Ways


The PowerShares DB Agriculture Fund (DBA) is up a mere 1% this year, a slack performance compared to some other commodities exchange traded products, but agriculture commodities could finally be ready to contribute to the commodities rally.

The PowerShares DB Agriculture Fund tries to reflect the performance of the Diversified Agriculture Index Excess Return, which is comprised of futures contracts on the most liquid and widely tracked agriculture commodities.

The PowerShares DB Commodity Index Tracking Fund (NYSEArca: DBC ) , which holds a basket of various commodities, is also in the red, but that fund has heavy energy exposure, levering it to oil prices. DBA lacks that catalyst and is dependent on positive price action in ags and softs, areas of the commodities complex that have languished this year.

DBA currently features exposure to eights commodities, including cattle, coffee, corn, soybeans and wheat.

“Money managers more than doubled their wagers on a rally for agriculture prices, pushing their holdings to the biggest since July, after betting on declines just last month. The investors are now the most bullish on soybeans since May 2014 and trimmed the bets on declines for corn for the fifth time in six weeks. The Bloomberg Agriculture Subindex of eight farm products is heading for its best April rally since 2010,” reports Lydia Mulvany for Bloomberg.

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The Teucrium Soybean Fund (SOYB) has recently been soaring as well. 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%.

“Combined positions across 11 agricultural products rose to 368,088 futures and options in the week ended April 19, according to U.S. Commodity Futures Trading Commission data published three days later. That compares with 177,770 a week earlier,” according to Bloomberg.

The Teucrium Corn Fund (CORN) “provides investors unleveraged direct exposure to corn without the need for a futures account.  The Teucrium Corn Fund was also designed to reduce the effects of backwardation and contango,” according to Teucrium.

Corn prices in the Midwest now cost more to produce them, and U.S. farm income is headed for a 14-year low. Researcher AgResource Co. now estimates a $50 loss for every acre sown on average. The USDA previously forecast net farm income will drop to $54.8 billion this year, the lowest since 2002 and half the record of $123.3 billion in 2012.

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PowerShares DB Agriculture Fund