Grain Futures: The Easy Way To Profit!
Grain Futures Got You Stumped? Look To These ETFs…
The bullish action in grains the past few weeks may have you wondering about the best ways to profit from these markets.
Of course, you could always go straight to the futures market to trade grain futures firsthand. But unless you’re well versed in futures lingo and the way these markets trade, I’d steer clear of them.
Instead, look to agriculture based exchange traded funds (ETFs). There are a number of great ETFs that track grain futures, and they trade just like stocks. What’s more, there’s none of the complicated order entry and excess leverage like you’ll find in futures.
To get you started on the road to grain market gains, I’ve put together a list of the best agriculture and grain ETFs the market has to offer.
To qualify for the list, the product must meet two criteria:
- A reasonable expense ratio.
- Sufficient intraday liquidity, which makes entering/exiting a trade easier.
If you don’t know what an expense ratio is, check out this recent dialogue. And if you don’t know the difference between an ETF and ETN, be sure to read this article.
Let’s get to it…
ETFs For Individual Grain Futures
As you may have guessed, there are a number of different ways to play the agriculture industry through commodity ETFs. You can trade ETFs that focus on the industry as a whole, or you can narrow down to products that are a pure play on an individual grain futures market.
Here’s a short but sweet list of individual grain commodity ETFs…
Corn
Teucrium Corn Fund $CORN: Here’s the tried-and-true product for trading corn via an ETF. $CORN has adequate liquidity and an expense ratio of 2.9%. While the expense ratio is a bit higher than I prefer, $CORN is the only pure play commodity ETF for corn futures. If you’re looking for a simple way to play the corn market, this is it!
Soybeans
Teucrium Soybean Fund $SOYB: Here’s another grain-focused product from the Teucrium family of ETFs. $SOYB gives investors a hassle free way to play the soybean market. With an expense ratio of 1.0% and adequate liquidity, it’s a great way to trade beans.
Wheat
Teucrium Wheat Fund $WEAT: Here’s the last of the major grain commodity ETFs. $WEAT has a rather high expense ratio of 3.7%, which would usually deter me from trading it. But since it’s the only wheat focused ETF the market currently has to offer, I have to make an exception. If there’s an opportunity to profit in the wheat market, $WEAT is the only way to play it via commodity ETFs.
As you can see, Teucrium Trading LLC is the issuer of all the above funds. Visit their website and you’ll find additional information on their products along with valuable USDA grain reports.
With the individual grains out of the way, here’s a list of products that wrap the entire Ag industry up into a diversified package…
- Powershares DB Agriculture Fund $DBA: If you’re looking to get long the entire Ag industry in one simple step- this is the best way to do it. $DBA is an unequally weighted portfolio of Ag commodities which includes cattle, cocoa, coffee, corn, cotton, lean hogs, live cattle, soybeans, sugar, and wheat. The fund has good liquidity and an expense ratio of 0.85%, which makes it appropriate for longer-term investing purposes.
- iPath Bloomberg Grains Total Return $JJG: Here’s a great way to hold the three major grain commodities in one easy step. $JJG holds an unequal weighting in corn, soybeans, and wheat. With an expense ratio of just 0.75%, it’s a great way to bet on upside in the major grain commodities.
- Elements Rogers Intl. Commodity Index $RJA: This one is a doozy. $RJA holds just about every Ag commodity you can think of including milk, rubber, rapeseed, oats, and milling wheat. I’m not sure why any investor would be concerned with such trivial commodities, but this is the way to play them if you are. The fund has a low expense ratio of 0.75% along with sufficient liquidity.
There you have it…
We just covered the best Ag commodity ETFs the market has to offer. As you may be aware, there are other Ag focused ETFs out there, but they’re not included on this list due to low liquidity and/or a high expense ratio.
If you’re looking for grain market gains, the ETFs above are a great way to go!
Until Next Time,
Justin Bennett
BIO: Justin Bennett is the head commodity research analyst at Commoditytradingresearch.com. With over a decade of real world trading experience, he finds ways for you to consistently profit from movements in commodities and the companies producing them. Sign up for our free reports and commodity newsletter at https://commoditytradingresearch.com/free-sign-up.
Category: Commodity Trading, Grains
