The commodities market isn’t immune to the ebb and flow of interest rate policy from the US Federal Reserve despite its status as an uncorrelated asset. This week’s comments from the Fed will still play a crucial role on how commodities move.
Should the Fed continue its hawkish stance with regard to interest rates, commodities could continue serving as a go-to play for an inflation hedge. The capital markets are expecting another substantial rate hike as Wall Street waits, which could push the dollar higher and thus tamp down demand for commodities.
Either way, it makes for interesting times when it comes to the commodities market.
“A chunky rate hike is now largely priced into markets, but we think it could still keep a lid on prices,” said analysts at Capital Economics, according to a Bloomberg article.
2 Options for Agricultural Exposure
Whether it’s for a continued inflation hedge or to simply diversify a portfolio with alternative assets, a pair of exchange traded funds (ETFs) from Teucrium are worth considering for agricultural exposure that’s more targeted than broad-based commodities. When it comes to commodities exposure, most investors may think oil, but agricultural exposure can also provide more commodities diversification.
For investors looking for agriculture exposure who don’t know where to start, this is where Teucrium can fill a void, offering investors an easy solution. Getting exposure to commodities doesn’t mean investors have to hold various positions.
Investors can have it all in the convenience of one ETF: the Teucrium Agricultural Fund (TAGS). The fund combines exposure to corn, wheat, soybeans, and sugar through other Teucrium ETFs that focus specifically on these commodities, essentially offering investors a fund of funds.
Funds featured in TILL:
- the Teucrium Corn Fund (CORN)
- the Teucrium Wheat Fund (WEAT)
- the Teucrium soybean Fund (SOYB)
- the Teucrium Sugar Fund (CANE)
Gilbertie also mentioned another fund to consider: the Teucrium Agricultural Strategy No K-1 ETF (TILL), which provides investors with long-only futures price exposure to corn, wheat, soybeans, and sugar. One difference with TILL is that it does not issue a K-1 tax form, but rather a 1099 form.
TILL will hold one futures contract in each of the four markets (corn, wheat, soybeans, and sugar) excluding the front-month (aka spot) contract. TILL is also an actively managed fund, giving investors more dynamic exposure to the markets than does TAGS.
For more news, information, and strategy, visit the Commodities Channel.