Broad commodities have struggled this year. The S&P GSCI Index is down more than 5% year-to-date. However, there are still opportunities when investors dig a little deeper, according to Teucrium’s Senior Portfolio Specialist Jake Hanley.
“Commodities have taken it on the chin, generally speaking, in 2023,” he said at a panel on VettaFi’s Alternatives Symposium.
But according to Hanley, a lot of investors “put commodities under one big basket view.” As a result, they can miss out on individual opportunities.
See more: Agricultural Economists Upbeat for 2024 Commodities Outlook
For example, Hanley noted some bright spots within commodities. In addition to gold, “sugar is [also] a bright spot.” He noted that the Teucrium Sugar Fund (CANE ) is up nearly 60% year-to-date.
So, what’s impacting agriculture specifically? According to Hanley, “it’s supply and demand.” And what impacts that? Weather. Droughts, for example, have significantly impacted agricultural prices.
“Weather doesn’t care about price-to-equity ratios,” Hanley said. “Weather doesn’t care about 10% yield.”
Tapping Into the Opportunities Within Agriculture
In addition to touting CANE, Hanley cited a couple more Teucrium funds that can tap into opportunities within agriculture. For example, sometimes investors “don’t want to be long on commodities.” That’s where the long-short Teucrium AiLA Long-Short Agriculture Strategy ETF (OAIA ) comes into play.
Meanwhile, the long-only Teucrium Agricultural Strategy No K-1 ETF (TILL ) is “a beta play… that offers potential diversification benefits when you need it most.”
When asked what percentage of their average client portfolio was in commodities, most attendees (51%) said less than 5%. This seemed to buttress Hanley’s point about investors needing further education on the asset class.
“Less than 5% is somewhat shocking,” Hanley said in response to the poll results. He added, however, that this “presents an opportunity… to educate folks on why you might consider a long-term strategic allocation to commodities.”
For more news, information, and analysis, visit the Commodities Channel.
