Despite a persistent drought in California, the largest agriculture state in the U.S., record harvests in other parts of the country are chasing investors from agriculture exchange traded funds and exchange traded notes (ETNs).
Agriculture ETFs were beloved by investors through the first quarter and into the early part of the second quarter as uncooperative weather conditions lifted prices for commodities ranging from coffee to cocoa and fears of depressed supply elevated livestock prices. That sent the PowerShares DB Agriculture Fund (DBA) higher by 20.5% through the first four months of the year.
It took DBA just two and a half months to rake in over $146 million in assets. A total that as of mid-March represented 10% of the ETF’s assets under management. [Awesome Ag Commodities Lift This ETF]
However, investors’ taste for agriculture commodities funds and ETNs has waned. “After taking in more money than precious metals or energy funds during the first five months of 2014, exchange-traded products backed by agriculture had a net outflow for the year of $57.7 million as of Aug. 29, down 2.9 percent,” reports Megan Durisin for Bloomberg.
To its credit, DBA pulled in $5.24 million in new assets last week, according to PowerShares data, but other agriculture ETFs have been riddled with outflows.
Some investors have also missed out on the epic coffee that has sent shares of the iPath Dow Jones-UBS Coffee Total Return Sub-Index ETN (JO) up 72.5% this year. Although JO is the best-performing non-leveraged exchange traded product of any type this year, the ETN has shed $109 million in assets. [More Upside for Coffee ETNs]
Other agriculture commodities have not been as fortunate in the performance department. The Teucrium Corn Fund (CORN) and the Teucrium Soybean Fund (SOYB) are off 15.6% and 5.47%, respectively, year-to-date.
Inspections across Ohio to Nebraska show corn output in the U.S., the world’s largest producer, could be 1% above government estimates and soybean output could be 1% higher, Bloomberg reports
The ideal weather conditions helped corn stalks produce more kernels than normal and increased seed pod growth in green soy plants. [Corn, Soybean ETFs Lag in Bumper Crop Year]
There are signs that some investors are trying to catch a bottom with select agriculture ETPs. For example, CORN has attracted $42.3 million in new assets this quarter tumbling 12.5% since July 1. The iPath Dow Jones-UBS Cotton Total Return Sub-Index (BAL) has added nearly $9 million this quarter despite sliding 9.6%.
Teucrium Corn Fund