Agricultural ETFs Soar as Corn Prices Reach Three-Year High
Agricultural exchange-traded funds (ETFs) outperformed the S&P 500 for two consecutive months, and investors are wondering why this is happening. The Invesco DB Agriculture Fund (DBA) led the way, gaining 6.2% in July and another 3.7% over the past month as of August 28. Other agricultural ETFs, such as Teucrium Corn Fund (CORN), Teucrium Wheat Fund (WEAT), and Teucrium Soybean Fund (SOYB) have also seen significant gains.
The rally in corn prices can be attributed to several factors, including deteriorating crop conditions, hot and dry weather stress, and export demand in the United States. China's corn imports rose 61.3% year-over-year to 1.36 million tons in January-July, according to Trading Economics.
Wheat prices have also surged due to disruptions in Black Sea exports caused by attacks on ports and vessels. This has led to a sharp increase in global wheat prices, as stated by a senior UN official quoted in Georgia Today. Ukraine's agricultural exports are expected to fall by more than half this season from previous estimates.
Geopolitical tensions and inclement weather will likely continue to drive the rally in soft commodities. Citi raised its price targets for corn, soybeans, and wheat due to a strengthening Super El Niño pattern.