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Grains ETFs Building Momentum


Grains have seen some signs of life this week with JJG (iPath DJ-UBS Grains Total Return ETN, Expense Ratio 0.75%) bumping right against its 50 day moving average this morning after trading with a $48 handle inside of the past two weeks.

JJG reflects the returns from futures contracts in the following markets (Corn 42.97%, Soybeans 35.57%, and Wheat 21.46%).

Similar momentum has built in related ETFs such as SOYB (Teucrium Soybean Fund, Expense Ratio 1.00%) and WEAT (Teucrium Wheat Fund, Expense Ratio 1.00%) although CORN (Teucrium Corn Fund, Expense Ratio 1.00%) has seen some price choppiness lately and does not appear to be on the same footing as SOYB and WEAT from a technical standpoint.

Other diversified ways to play Grains include GRU (ELEMENTS MLCX Grains Index TR ETN, Expense Ratio 0.75%), and WEET (iPath Pure Beta Grains ETN, Expense Ratio 0.75%). Of all of the funds mentioned, CORN sees the highest amount of daily turnover at about 60,000 shares traded, which is clearly not a huge volume level in the context of all ETFs.

Additionally, none of these funds are very large in terms of assets under management, as CORN has $34.8 million currently for example, and JJG holds $114 million.

It is fair to say that these ETPs still remain largely untapped as far as potential advisor and institutional usage, although we do see spurts of activity here and there dependent on agricultural market shocks (for example last CORN’s meteoric rise in price, trading volume, and asset levels from last June through August) amidst severe drought conditions that were present through much of the Eastern and Central United States, damaging obviously impeding corn crops.

Of course weather among other factors, is a key determinant of the shorter and longer term price directions that the above commodities may take, and commodities as such provide a unique opportunity for alpha for those managers that can adeptly analyze such trends and build a trading strategy around them utilizing some if not all of the above ETP tools, many of which simply were not available to investors just a few years ago.

iPath DJ-UBS Grains Total Return ETN

For more information on Street One ETF research and ETF trade execution/liquidity services, contact Paul Weisbruch at pweisbruch@streetonefinancial.com.

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