Agricultural futures and ETFs are showing some explosive movements. The oats and wheat markets are making significant gains after the Independence Day holiday.
While soybeans shot higher last Friday and Monday, wheat and oats are seeing sizable gains due to dryness concerns in spring wheat areas and a slow HRW harvest. After opening higher, corn and soybeans are down due to profit-taking after hitting resistance levels and light post-holiday trade.
On the Chicago Board of Trade, September Wheat is trading up over 3.70% at 665-3/4 cents on Wednesday. September Oats rocketed over 5% to reach 407-1/4 cents as of 1230PM EST.
Agricultural markets can be an interesting play for savvy investors looking to diversify portfolios. Some experts are projecting significant growth in the future.
According. to advisory firm Motor Intelligence, “The global oats market is projected to witness a CAGR of 4.80% over the next five years. The changing lifestyle of consumers, including the decision to opt for light and healthy meals, is driving the demand. The high nutritional content of oats is the major driver of the market. Additionally, an increase in preference for healthy meals and demand for convenience food drives the oats market. Also, its added functional properties enhance its usage by consumers. It is witnessed to be consumed majorly as a breakfast food.”
Which Agricultural ETFs Can Help Savvy Investors Diversify Assets?
For savvy investors looking to trade oats and agricultural futures using ETFs, the Teucrium Wheat Fund (WEAT ), up 2.33% Wednesday, is one option.
This ETF offers exposure to wheat futures contracts; when WEAT debuted in 2011, it became the first pure-play wheat ETP on the market. Like many exchange-traded commodity products, WEAT should not be expected to deliver exposure to spot wheat prices. Because the underlying index consists of wheat futures contracts, factors such as the slope of the futures curve and the current level of interest rates will impact the performance of WEAT. One distinguishing factor of WEAT—and all Teucrium agricultural products—is the structure of the underlying holdings. Instead of concentrating holdings in front-month futures, WEAT spreads futures contracts across multiple maturities. That is done to minimize the impact of contango on bottom-line returns.
Teucrium has several other agricultural ETFs as well, including the Teucrium Sugar Fund (CANE ), Teucrium Corn Fund (CORN ), and Teucrium Agricultural Fund (TAGS ), which offers exposure to four major agricultural commodities, including corn, sugar, soybeans, and wheat.
For more news, information, and analysis, visit the Commodities Channel.
