Liquid Alternatives: Why the Risk-Reward on Grain ETFs Makes Sense

Agricultural commodities offer diversification out of a traditional portfolio and generate uncorrelated returns.
Speaking to Tom Lydon at the Inside ETFs conference, Sal Gilbertie, CEO, Teucrium, observed that agricultural commodities such as grains were an excellent diversifier. (ETF Trends)
Giving an interesting insight, Gilbertie said that grains outperformed the S&P500 in 11 out of 12 instances when the index fell by 10% or more.
Observations on grains
https://www.youtube.com/watch?time_continue=12&v=8KWSi6WlRFU
In other comments on the chat, Gilbertie said favorable weather had ensured a plentiful supply of grains in the past seven years or so. Grains have therefore been bearish in recent times.
But the probability is mounting that there a bad weather year could be round the corner. Corn, for instance, has doubled twice within the past 13 years due to instances of drought.
Grains can deliver substantial alpha, said Teucrium’s Gilbertie, “when it stops raining.”
Further, grains such as soybean and corn have been trading at the cost of production because of market volatility from trade wars, he observed.
Meanwhile, analysts believe that grains are negative year-to-date and the virus is, of course, an important factor. However, their recent price decline has more to do with supply chain disruptions rather than demand destruction.
Jim Rogers on agriculture
Commodity guru Jim Rogers observes that farmers are now much older, on average, around the world. And that fewer and fewer people are training in agriculture.
In his opinion, the situation in agricultural commodities is shaping up for “structural undersupply” accompanied by a shortage of skilled and migrant workers.
ETFs to bet on grains
Given all the above factors, the risk-reward profile for a long-term on grains appears favorable, and an ETF could a suitable vehicle for that thesis.
Teucrium offers a suite of ETFs including the following grain ETFs. Investors should note that the ETFs invest in futures contracts, not the spot market:
ETF name | Ticker (NYSEARCA: ) | YTD change % | % (Near/Next/Far Contracts) |
Teucrium Corn Fund | CORN | -18.78 | 35/30/35 |
Teucrium Wheat Fund | WEAT | -8.38 | 35/30/35 |
Teucrium Soybean Fund | SOYB | -13.01 | 35/30/35 |
Teucrium Sugar Fund | CANE | -23.01 | 35/30/35 |
Teucrium Agricultural Fund | TAGS | -17.79 | 35/30/35 |
Related Story: Venture Capital: Pivot Bio, Potential Disruptor of Synthetic Fertilizers, Collects $100M

Latest Alternative Investment News

Alternative Investments/ESG: Six New Responsible Funds Flag Off Morgan Stanley’s ETF Platform
Morgan Stanley Investment Management (MSIM) has launched its ETF platform with six Calvert ETFs listed on NYSE Arca. The ETFs feature Calvert’s responsible investing approach and offer access to four…

Artificial Intelligence: MusicLM, A New Generative AI Tool From Google, Creates Music From Text
Google (NASDAQ: GOOGL) recently published a research paper on its new AI tool, MusicLM, designed to create music. The tool is based on machine learning and is trained on vast…

Artificial Intelligence: Snap Mulling AR Glasses Powered By Generative AI
Snap (NYSE: SNAP), the parent company of Snapchat, has hinted at future AR glasses powered by generative AI technology. CEO Evan Spiegel stated that AI will be critical to the…

Digital Assets: Binance And Mastercard Launch Prepaid Crypto Card In Brazil
Binance and Mastercard (NYSE: MA) have jointly launched the Binance Card in Brazil, allowing Binance users in the country to make purchases and pay bills with cryptocurrencies like bitcoin and…