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Grains ETF Spikes 10% on Week on Midwest Drought

tlydon@globaltrend.com (Tom Lydon)

The worst drought in over five decades is damaging crops and driving the rally in corn, grains and agriculture ETFs.

The iPath Grains ETN (JJG) was the week’s top performer in unleveraged exchange traded products with a 10% gain. [Corn ETF Rallies 35% in a Month on Record Prices]

Meanwhile, ETFs pegged to the major U.S. indices were on track for slight weekly gains in afternoon trading Friday. The S&P 500 added 0.6%, the Dow rose 0.4% and the Nasdaq Composite climbed 0.9%. [Corn ETF Surges]

Yet the Dow shed more than more than 100 points Friday afternoon on Eurozone debt fears focused on Spain. Spanish bond yields rose to euro-era highs.

Europe jitters faded earlier in the week and the S&P moved higher, “but it looks as if Europe is taking center stage again, with Spain as the main act,” said Quincy Krosby, market strategist at Prudential Financial, in a Reuters report.

An ETF tracking Spain was this week’s worst performer among unleveraged funds with a decline of more than 7%.

In sector ETFs, SPDR KBW Bank ETF (KBE) slipped about 3% on disappointing earnings.

Conversely, agriculture-related ETFs led the way on soaring temperatures in the U.S. Elsewhere in commodities, oil ETFs were strong as crude prices climbed back above $90 a barrel.

The top unleveraged ETFs this week were iPath Grains ETN, iPath Agriculture ETN (JJA) and U.S. Natural Gas Fund (UNG). They were up more than 6% for the week in afternoon trade Friday.

The bottom unleveraged ETFs this week were iShares MSCI Spain, iShares MSCI Italy (EWI) and Guggenheim China Small Cap (HAO) with losses of over 4%.

In next week’s economic data, look for reports on home prices and sales, durable goods orders and consumer sentiment. Investors will also get their first look at second-quarter GDP on Friday.

iPath Grains ETN