This Day On The Street
Continue to site
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

Wheat ETFs May Gain From Supply Shocks

NEW YORK ( TheStreet) -- Fears that a supply shock could broaden the supply and demand imbalance in wheat have pushed the commodity to a 13-month high and there still may be opportunities for some strength in the wheat market.

Harsh weather conditions, such as a severe drought in Russia and excessive rainfall in Canada, have also provided the groundwork for positive price support for wheat. In fact, production in Russia is expected to decrease significantly in order to prevent prices from skyrocketing; that could lead to a decline in exports.

In fact, severe weather conditions have led the Food and Agriculture Organization to state that production of wheat in key producing areas is expected to decrease by at least 10 million to 15 million tons this year. As a result, some nations have already taken measures to slow down exports to meet domestic demand. One such nation is Ukraine, which has implemented stricter wheat quality controls to curb the potential of huge domestic price spikes.

Another factor that could lead to positive price support for wheat is increased demand from expected global population growth and increased purchasing power of individuals in emerging markets.

For those looking to gain exposure to wheat, here are a few possibilities:

  • PowerShares DB Agriculture (DBA), which allocates nearly 9.2% of its assets to wheat.
  • PowerShares DB Agriculture Long ETN (AGF), which seeks to replicate an index that allocates nearly 25% of its assets to wheat.
  • iPath DJ-UBS GrainsTR Sub-Idx ETN (JJG)
  • ELEMENTS MLCX Grains Index TR ETN (GRU)




Written by Kevin Grewal of SmartStops i in Houston.

Grewal has no positions in the securities mentioned.

Kevin Grewal serves as the editorial director and research analyst at The ETF Institute, which is the only independent organization providing financial professionals with certification, education, and training pertaining to exchange-traded funds (ETFs). Additionally, he serves as the editorial director at SmartStops.net where he focuses on mitigating risks and implementing exit strategies to preserve equity. Prior to this, Grewal was an analyst at a small hedge fund where he constructed portfolios dealing with stock lending, exchange-traded funds, arbitrage mechanisms and alternative investments. He is an expert at dealing with ETFs and holds a bachelor's degree from the University of California along with a MBA from the California State University, Fullerton.

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
SYM TRADE IT LAST %CHG
AGF $12.10 0.00%
DBA $22.35 0.00%
GRU $4.58 0.00%
JJG $33.98 0.00%
AAPL $130.28 0.00%

Markets

DOW 18,080.14 +21.45 0.12%
S&P 500 2,117.69 +4.76 0.23%
NASDAQ 5,092.0850 +36.0220 0.71%

Partners Compare Online Brokers

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs