China’s Booming Appetite May Create A Surge in Demand For These Agricultural ETF’s

Share This Article
October 24, 2009 1:44pm ETF BASIC NEWS NYSE:DBA

im-hungry“While most commodities have blasted off, agricultural commodities have lagged the rally. I think that’s going to change in a big way, thanks to a country with a billion hungry


 mouths and plenty of cash. I’m talking about China. And I have three picks to play China’s growing hunger. Why has agriculture lagged? It boils down to a couple of factors,” Sean Brodrick Reports From Howe Street.

1: Expectations of bumper crops in the U.S. and other countries.
 
2: Fears that the global recession would weigh on demand for meat. Since it takes a lot of grain to feed pigs and cows, that in turn weighed on expectations of grain demand.

Brodrick continues writing, “But now, with harvest season upon us, those two fears are fading. Weird weather is dragging down harvests in the U.S. and Australia. And signs of recovery in emerging markets like China are ramping up prospects of meat consumption again. Another factor to consider is the United States is the Saudi Arabia of grain — exporter to the world. As the U.S. dollar slumps lower against other currencies, our grain becomes more affordable for deep-pocketed foreigners. That revs up grain sales … and prices. And who is going to buy a lot of our agriculture products? China!”

Here are 3 ETF’s Sean Brodrick says are the best ways to play China’s demand surge in agricultural commodities.

The PowerShares DB Agriculture Fund (DBA) tracks a bunch of agricultural commodities. To comply with CFTC dictates, the DBA recently expanded from its four holdings of corn, wheat, soybeans and sugar. It revised the fund and added Cocoa, Coffee, Cotton, Feeder Cattle, Kansas Wheat, Lean Hogs, and Live Cattle futures to the mix.

The iPath Dow-Jones AIG-Grains ETN (JJG) tracks soybeans, wheat and corn. Be careful, however — there’s not a lot of volume in this one so entries and exits can be tricky.

The Market Vectors Agribusiness ETF (MOO) tracks a basket of agriculture-related companies including Archer Daniels Midland, Monsanto, Potash, Mosaic, Wilmar and more.

See Full Story: HERE

Here is a detailed look at the 3 ETF’s mentioned below:

The investment (DBA) seeks to track the price and yield performance, before fees and expenses, of the Deutsche Bank Liquid Commodity Index – Optimum Yield Agriculture Excess Return. The index is a rules-based index composed of futures contracts on some of the most liquid and widely traded agricultural commodities – corn, wheat, soy beans and sugar. The index is intended to reflect the performance of the agricultural sector.

TOP 10 HOLDINGS (DBA) ( 106.66% OF TOTAL ASSETS)  
 
Company Symbol % Assets
CORN FUTURE MAR 10 N/A 9.25
CORN FUTURES DEC 09 N/A 14.38
RED WHEAT FUT MGE JUL 09 N/A 7.61
SOYBEAN FUTURE JAN10 N/A 8.64
SOYBEAN FUTURE NOV 09 N/A 16.02
SUGAR #11 (WORLD) JUL09 N/A 30.53
WHEAT FUTURE (KCB) DEC09 N/A 2.48
WHEAT FUTURE(CBT) DEC09 N/A 2.39
WHEAT FUTURE(CBT) JUL09 N/A 7.39
WHEAT FUTURE(KCB) JUL09 N/A 7.97

Chart for PowerShares DB Agriculture (DBA)

The investment seeks (JJG) results that correspond generally to the price and yield performance, before fees and expenses, of the Dow Jones-AIG Grains Total Return Sub-Index. The fund is designed to reflect the performance of grains. The index is composed of three futures contracts, corn, soybeans and wheat.

Chart for iPath DJ AIG Grains TR Sub-Idx ETN (JJG)

The investment (MOO) seeks to replicate as closely as possible, before fees and expenses, the price and yield performance of the DAXglobal Agribusiness index. The fund normally invests at least 80% of total assets in equity securities of U.S. and foreign companies primarily engaged in the business of agriculture, which derive at least 50% of their total revenues from agribusiness. Such companies may include small- and medium-capitalization companies. It is nondiversified.

TOP 10 HOLDINGS (MOO) ( 60.77% OF TOTAL ASSETS)  
 
Company Symbol % Assets
ARCHER DANIELS MDLND (ADM) 4.49
DEERE CO (DE) 4.38
IOI N/A 3.94
Komatsu Ltd. N/A 4.95
Kubota Corporation N/A 4.64
MONSANTO COMPANY (MON) 7.73
POTASH CP SASKATCHEW (POT) 6.06
SYNGENTA AG ADS (SYT) 7.34
MOSAIC COMPANY (THE) (MOS) 6.94
Wilmar (F34.SI) 10.3

Chart for Market Vectors Agribusiness ETF (MOO)

GET A FREE TREND ANALYSIS FOR ANY ETF HERE!



9 "MUST OWN" Growth Stocks For 2021

Read Next



Free Investing Ideas Newsletter!

Join over 70,000 investors who get the latest insights and top rated picks from our free investment newsletter.

Most Popular



9 'MUST OWN' Growth Stocks for 2021

Explore More from ETFDailyNews.com

Free Investment Newsletter

Join over 70,000 investors who get the latest insights and top rated picks from our free investment newsletter.

ETFDailyNews.com respects your privacy.

Best ETFs

We've rated and ranked nearly 2,000 ETFs and ETNs using our proprietary SMART Grade system.

View Top Rated ETFs

Best Categories

We've ranked dozens of ETF categories based on relative performance.

Best ETF Categories