Top 10 Agricultural Commodity ETFs

NEW YORK ( ETF Digest) -- Aside from traditional non-correlation of commodity markets to conventional portfolio allocations, concerns about food prices offer strategic investment opportunities in this sector. When prices of foodstuffs are rising, it makes sense to be able to profit or even hedge against these events. This logic naturally would include other commodity ETF/ETN products directed toward metals, energies and currencies.

That said, these targeted agricultural markets aren't for everyone. Some on our listing are perhaps too targeted and take unique skills to understand how they may be utilized. Grains are influenced by weather, seasonality, currency, disease and many other factors. Meats may trade counter-intuitively given weather and disease as farmers drive herds to markets at odd times. Cotton is affected by similar conditions and the health of the overall economy. So-called "softs" including coffee, sugar and cocoa also have their unique circumstances including regional issues.

As a former CTA (Commodity Trading Advisor) and CPO (Commodity Pool Operator), I know the value of having an allocation of most portfolios to the commodity sector. These provide increased diversification opportunities for any portfolio. After nearly 40 years of seeing these positive effects during a variety of market conditions, I know first-hand their benefits. 

Four other risk factors should be considered:

·         The CFTC's varying considerations regarding commodity position limits as applied to the assets of ETF and ETNs is still in limbo.

·         The credit quality of ETNs given these are "notes" many guaranteed by Barclay's and Deutsche Bank.

·         Backwardation (back month contracts lower than front month) and Contango (back months higher than front month) can negatively affect contract rollover for investors.  

·         Since most commodities trade in dollars, the value of the dollar can positively or negatively affect performance.

Deutsche Bank features inverse and leveraged long ETNs for those investors wishing to hedge or speculate. But some of these markets may be thin and/or illiquid taking unique skills to utilize them effectively.

Whereas our previous technical analysis methodology involved using evaluating monthly charts commodity markets must be viewed with shorter time horizons. This is due to obvious increased volatility but also due to the peculiar nature with which underlying commodity contracts trade. Some contracts expire monthly and others quarterly. Some have serious seasonal characteristics inherent with agricultural issues such as growing seasons, weather and disease. Therefore, it pays to be more active and utilize a combination of weekly and daily charts to manage risk. We utilize many indicators to evaluate technical conditions including the 22 period weekly moving average and MACD indicator.

When prices are above the moving average, stay long, and when below remain in cash or short. Some more interested in a fundamental approach may not care so much about technical issues but I've rarely met a successful fundamental commodity trader. Premium members to the ETF Digest receive added signals when markets become extended such as employing DeMark triggers to exit overbought/oversold conditions.

#10: UBS Bloomberg Food ETN (FUD)

FUD follows the UBS Bloomberg CMCI Food Index Total Return Index which provides direct exposure to a basket of 11 futures contracts from agricultural and livestock sectors. The fund was launched in April 2008. The expense ratio is .65%.

AUM equal $42 million and average daily trading volume is less than 10K shares. As of early March 2012 the YTD return is 1.61%. The one year return was -8.34%.

#9: Barclays iPath Livestock ETN (COW)

COW follows the Dow Jones-UBS Livestock Subindex Total return which is currently composed of two livestock commodities--lean hogs and live cattle--which are traded and rolled over on U.S. exchanges. The fund was launched in October 2007.

The expense ratio is .75%. AUM equal $81 million and average daily trading volume is 52K shares. As of early March 2012 the YTD return is .47%. The one year return was -6.85%.

#8: Barclays iPath Coffee ETN (JO)

JO follows the Dow Jones-UBS Coffee Subindex Total Return which is another single commodity product investing in a single coffee futures contract which is continuously rolled-over. The fund was launched in June 2008. The expense ratio is .75%.

AUM equal $22 million and average daily trading volume is less than 20K shares. As of early March 2012 the YTD return is -19.20%. The one year return was -38.59%.

Holdings consist of rolling over coffee futures contracts.

#7: ELEMENTS Rogers International Agriculture ETN (RJA)  

RJA follows the Rogers International Commodity Index-Agricultures Total Return which is an index of 20 agricultural commodity futures contracts and is a sub-index of the Rogers International Commodity Index.

The fund was launched in October 2007. The expense ratio is .75%. AUM equal $48 million and average trading volume is more than 400K shares. As of early March 2012 the YTD return is .34%. The one year return was -19.03%.

#6: Barclays iPath Cotton ETN (BAL)  

BAL follows the Dow Jones-UBS Cotton Subindex Total Return Index which is a single commodity consisting of rolling over one cotton futures contract. The fund was launched in June 2008. The expense ratio is .75%. AUM equal $41 million and average daily trading volume is 22K shares.

As of early March 2012 the YTD return is -4.39%. The one year return was -48.24%.

Holdings consist of a rollover of cotton futures contracts.

#5: Barclays iPath Sugar ETN (SGG)

SGG follows the Dow Jones-UBS Sugar Subindex Total Return Index which simply consists of one futures contract of sugar which is rolled over upon contract expiration. The fund was launched in June 2008. The expense ratio is .75%. AUM is $41 million and average daily trading volume is less than 27K shares. As of early March 2012 the YTD return is 4.58%. The one year return was -3.55%.

Lighter volume makes order entry requirements more specific, i.e. "limit orders".

Holdings consist of a rollover of sugar futures contracts.

Another market for your consideration is JJS (Barclays iPath Softs ETN) which follows sugar, coffee and cotton futures contracts in much the same manner as SGG alone. The fund was launched in June 2008. The expense ratio is .75%. AUM equals $16 million and average daily trading volume is less than 5K shares. As of early March 2012 the YTD return was -4.86%. The one year return was -28.48%.

#4: Teucrium Corn ETF (CORN)  

CORN follows the rollover of corn futures traded on the CME and by its structure is designed to give investors unleveraged exposure to corn futures contracts. The fund was launched in June 2010. The expense ratio is 1.42%. AUM equal $68 million and average daily trading volume is 60K shares. As of early March 2012 the YTD return is -4.29%. The one year return was -2.48%.

The holdings consist of corn futures contracts which continually rollover.

#3: Barclays iPath Agriculture Sub-index ETN (JJA)

JJA follow the Dow Jones-UBS agriculture Subindex Total Return Index which is composed of seven futures contracts on agricultural commodities. The fund was launched in October 2007. The expense ratio is .75%.

AUM equal $134 million and average daily trading volume is 36K shares. As of early March 2012 the YTD return is .54%. The one year return was -16.33%.

#2: Barclays iPath Grains Total Return ETN (JJG)

JJG follows the Dow Jones-UBS Grains Subindex Total Return which is an index composed of just three futures contracts in Soybeans, Corn and Wheat. The fund was launched in October 2007. The expense ratio is .75%.

AUM equals $168 million and average daily trading volume is 79K shares. As of early March 2012 the YTD return is 2.29%. The one year return was -11.46%.

#1: PowerShares/DB Agricultural ETF (DBA)  

DBA follows the DBIQ Diversified Agriculture Index Excess Return which is composed of futures contracts on the most widely traded agricultural commodities. The fund was launched in January 2007. The expense ratio is .75%. AUM (Assets under Management) equal $2 billion and average daily trading volume is 1M shares. As of early March 2012 the YTD return is -1.63%. The one year return was -16.86%.

DBA provides the easiest and broadest exposure to the overall agriculture commodity market for most investors.

Data as of First Quarter 2012

DBA Top Ten Holdings & Weightings
  1. Live Cattle Future Apr12: 11.29%
  2. Sugar #11(World) Jul12: 10.40%
  3. Coffee 'c' Future Mar12: 9.31%
  4. Cocoa Future Mar12: 8.59%
  5. Soybean Future Nov12: 7.34%
  6. Corn Future Dec12: 7.22%
  7. Lean Hogs Future Apr112: 6.14%
  8. Wheat Future(KCB) Jul12: 5.41%
  9. Cattle Feed Future Mar12: 3.97%
  10. Soybean Future Jan13: 3.81%

Since most featured issues have different agricultural commodity focus and weightings it becomes a more difficult task to rank one higher than another. For most investors DBA and perhaps RJA would satisfy their exposure to these markets. Although we may use some of these in ETF Digest portfolios it's not our intention to recommend one over another at this time.

Our proprietary stars ranking system is outlined below. If an ETF you're interested in is not included but you'd like to know a ranking send an inquiry to support@ETFDigest.com and we'll attempt to satisfy your interest.


Strong established linked index
Excellent consistent performance and index tracking
Low fee structure
Strong portfolio suitability
Excellent liquidity


Established linked index even if "enhanced"
Good performance or more volatile if "enhanced" index
Average to higher fee structure
Good portfolio suitability or more active management if "enhanced" index
Decent liquidity


Enhanced or seasoned index
Less consistent performance and more volatile
Fees higher than average
Portfolio suitability would need more active trading
Average to below average liquidity


Index is new
Issue is new and needs seasoning
Fees are high
Portfolio suitability also needs seasoning
Liquidity below average

Direct commodity related ETPs (ETFs & ETNs) may be a good add to most portfolios contrary to conventional wisdom if investors can be systematic and disciplined. The key to this belief is remains these sectors generally are non-correlated to most conventional stock and bond portfolio allocations. 

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The ETF Digest has no current positions in the featured ETFs.

(Source for data is from ETF sponsors and various ETF data providers)