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Sunday, February 13, 2011

Down On The Farm: ETFs For Rising Food Prices

The story is pretty well known by now. Commodities prices have surged in 2010 and that includes agriculture commodities.

Sugar, wheat, corn, you name it, and it has probably seen some very bullish trade this year, but every pundit and his sister is forecasting higher food prices in 2011.

Farmers need to plant more crops to meet demand and that’s good news for fertilizer companies, so what are some solid ETF ideas for investors looking to profit from rising ag commodities in 2011. Here’s a list to get you started.

1) Market Vectors Agribusiness ETF (NYSE: MOO):
The aptly named MOO is the big kahuna of equities-based ETFs focused on the business of the farm. Top holdings include Deere (NYSE: DE), Monsanto (NYSE: MON), Mosaic (NYSE: MOS) and Potash (NYSE: POT), so MOO is literally an “all things farm” play.

2) Jefferies | TR/J CRB Global Agriculture Equity Index Fund (NYSE: CRBA):
An undiscovered rival to MOO, CRBA will have you involved in many of the same names, but if it’s volume you’re after, MOO remains the better option.

3) PowerShares DB Agriculture (NYSE: DBA):
Coffee, sugar, cocoa, cattle…oh my. DBA offers exposure to those and other commodities via rolling futures contracts. While DBA is a fine fund, the use of futures contracts runs up expenses and the expense ratio here is 0.85%, a tad high.

4) PowerShares DB Agriculture Double Long ETN (NYSE: DAG):
If you’re going to be involved with an ag ETF or ETN that is based on a variety of futures contracts, why not go leveraged? DAG is perhaps the best among leveraged ag ETNs and tracks an index composed of roughly equal percentages of corn, wheat, soybean, and sugar futures contracts.

Disclosure I am exploring the MOO at this time no plan to buy in the next 30 days. 

1 comment:

  1. These exchange traded notes are driving up the cost of food not a good thing.