Thursday’s ETF To Watch: Market Vectors Agribusiness ETF (MOO)

by on January 6, 2011 | ETFs Mentioned:

Equity markets are continuing to drift higher into the new year, with domestic indexes rising nicely on Wednesday after the markets digested a plate of encouraging economic data. Investors were cheerful about the positive jobs data which showed the private-sector adding 297,000 jobs, coupled with a better than expected ISM non-manufacturing report. On the commodities front, gold has gotten kicked around this week, with the yellow metal trading slightly lower on Wednesday, struggling to works its way up following the sharp sell-off on Tuesday. Wall-Street has a lineup of earnings due out this week, along with jobless claims coming into focus Thursday, and then finally capped-off by testimony from Ben Bernanke before the Senate Budget Committee on Friday [see also Announcing The FREE ETFdb iPhone App].

Commodities have gotten off to a rocky start this week, but yesterday’s solid earnings report from key commodity producer Mosaic has given analysts reason to hope that the bull market in agriculture will continue well into 2011. Due to this estimate-beating performance as well as upbeat comments from Mosaic executives, investors are sure to keep an eye on Monsanto, as the agricultural giant is slated to report earnings before the opening bell. Monsanto is a leading provider of agricultural products for farmers including corn, soybean, cotton, wheat, canola, sorghum and sugar cane seeds along with an array of herbicides. Analysts are expecting the company to earn $0.02 per share in this most recent quarter, after posting a loss of $0.02 per share in the same three-month period last year. Revenue is also projected to rise nearly 6 percent to $1.8 billion. Shares of Monsanto have been trending upward since the last earnings report in mid-October, when the stock managed to finally launch-off its multi-month low. The bellwether will look to retain its positive upward momentum and possibly break above the $70 mark later this year if demand remains robust for Monsanto-branded products [see Russian Wheat Crisis: Great News For Agribusiness ETFs?].

Monsanto’s earnings release will be closely followed by traders and investors alike, and for that reason today’s ETF to watch is the Market Vectors Agribusiness Fund (MOO). The fund has around 8% of its holdings allocated to Monsanto, and tracks the DAXglobal Agribusiness Index, which provides investors with exposure to publicly traded companies worldwide that derive at least 50% of their revenues from the business of agriculture [see MOO Fact Sheet]. MOO has been surging upward since the beginning of July, and considering the fund’s bumpy start in 2010, it has returned a measly 1.6% year to date, but an impressive 49% in the last 26 weeks [see MOO Fundamentals].

Monsanto’s earnings report will surely impact investor sentiment and the guidance that the company offers will offer insight into the future of the agribusiness sector as a whole. MOO is likely to see active trading today as investors and traders will scramble to add/subtract to their positions, based on the outlook for the whole sector and any additional comments that Monsanto makes regarding the health of its in-focus industry.

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Disclosure: Photo courtesy of Stan Shebs. No positions at time of writing.