NEW YORK (TheStreet) - After another grueling winter, the snow has all but melted here in the Berkshires. With the days getting longer and the weather getting warmer, ETF investors may want to consider arming their portfolios with positions that will prove beneficial during the sunny spring season.
There are a number of agriculture-related ETFs that should be on investors' radars for the months ahead. Since last summer the agriculture industry has dominated headlines as supply shortages and improving global economic conditions have pushed food prices to record levels.
Looking ahead to this year's growing season, the prices of a number of these crops appear set to remain at high levels. According to a
report, despite the fact that corn acreage is forecasted to increase to the second highest level since the early 1940s, the yield will not be enough to satisfy demand for cattle feed and ethanol.
PowerShares DB Agriculture ETF
is well suited to profit from rising food prices. The fund tracks a diversified basket of agriculture futures contracts, providing investors with one-stop-shopping exposure to some of the most popular farming-related products.
Some of the fund's largest positions include soybeans, corn, sugar, and cocoa. Beyond crops, however, the fund also provides investors with exposure to the livestock industry, tracking lean hogs, feeder cattle and live cattle.
DBA's wide net investing strategy allows investors to gain direct access to the agriculture industry. However, it is also possible to target the slice of the market using an equity-based approach through a fund like the
Market Vectors Agribusiness ETF
, which tracks a basket of companies which have become synonymous with the farming industry.
As farmers take to their fields in an attempt to profit from these sky-high food prices, companies involved in producing agricultural chemicals and machinery appear primed for strength. MOO's index is comprised of a diversified basket of the leading companies from these and other regions of the agriculture-related marketplace.
Top holdings include
Potash of Saskatchewan
and Syngenta. In total, the fund's 10 largest positions account for close to a third of its total portfolio.
Mosaic will be of particular interest in the coming days when it steps up to the earnings plate. The company's performance and outlook for the rest of 2011 will likely provide strong clues as to the state of the fertilizer industry.
From a geographic perspective, the largest slice of MOO's index is dedicated to the United States. Outside of the U.S., however, the fund boasts exposure to nations in the developed and emerging world. Singapore, Canada, Norway, and Switzerland are among the most represented international players within from this fund.
The agriculture industry has become a wildly popular region of the markets to watch as investors attempt to profit from factors including rising food prices, improving economic conditions and expanding populations.
Funds such as MOO and DBA present two attractive ways investors can instantly gain exposure to the products and companies that will benefit most as nations around the world work to keep hungry mouths fed.
Written by Don Dion in Williamstown, Mass.
At the time of publication, Dion Money Management owned PowerShares DB Agriculture ETF.