Best Agricultural Commodity ETFs for Q3 2022

WEAT, RJA, and CORN are the best agricultural commodity ETFs for Q3 2022

Agricultural commodities like corn, soybeans, and wheat are essential to the food supply, thus spawning a giant global commodities market to buy and sell them. However, individual agricultural commodities are subject to dramatic volatility related to factors including weather, season, population, and more.

Investors looking for exposure to agricultural commodities may prefer to instead own an agriculture-focused exchange-traded fund (ETF). These ETFs provide diversification by either investing in futures contracts of a range of different commodities or diversifying the maturity of the futures contracts held for a single commodity.

Key Takeaways

  • Agricultural commodities significantly outperformed the broader market over the past year.
  • The agricultural exchange-traded funds (ETFs) with the best one-year trailing total returns are WEAT, RJA, and CORN.
  • The top holdings of these ETFs are futures contracts for wheat; wheat, corn, and cotton; and corn, respectively.

Seven distinct agricultural commodity ETFs trade in the United States, excluding inverse and leveraged funds as well as funds with less than $50 million in assets under management (AUM). These ETFs provide exposure to agricultural commodities, not agricultural companies. The Russian invasion of Ukraine has significantly reduced Ukrainian wheat exports, a major source of the world's wheat. Russia also is a major exporter of wheat and fertilizer, which is key to the agricultural industry.

Agricultural commodities, as measured by the S&P GSCI Agriculture Index, have significantly outperformed the broader market over the past 12 months, with a total return of 21.4% compared with the S&P 500’s total return of -4.4%, as of May 9, 2022.

The best-performing agricultural commodity ETF, based on performance over the past year, is the Teucrium Wheat Fund (WEAT). We examine the three best agricultural commodity ETFs below. All numbers are as of May 9, 2022.

Teucrium Wheat Fund (WEAT)

  • Performance Over One Year: 45.1%
  • Expense Ratio: 1.14%
  • Annual Dividend Yield: N/A
  • Three-Month Average Daily Volume: 4,769,055
  • Assets Under Management: $487.2 million
  • Inception Date: Sept. 19, 2011
  • Issuer: Teucrium

WEAT is structured as a commodity pool, an investment vehicle that pools investors’ assets to invest in futures contracts. The fund provides exposure to the price of one of the most important agricultural commodities. Demand for wheat is growing dramatically, fueled by global population growth. Wheat has uses as food, animal feed, fuel, starch, paper, particleboard, and plastic. Note that WEAT does not provide exposure to spot wheat prices, but rather holds primarily wheat futures contracts across a variety of maturities. Also, given WEAT's targeted focus, the ETF may be best for investors looking to establish tactical exposure to a specific part of the commodity market rather than as a long-term, buy-and-hold portfolio.

Elements Linked to the Rogers International Commodity Index — Agriculture Total Return ETN (RJA)

  • Performance Over One Year: 26.1%
  • Expense Ratio: 0.75%
  • Annual Dividend Yield: N/A
  • Three-Month Average Daily Volume: 373,876
  • Assets Under Management: $261.6 million  
  • Inception Date: Oct. 17, 2007
  • Issuer: Government of Sweden

RJA is structured as an exchange-traded note (ETN), a type of unsecured debt security that is similar to a bond but does not make interest payments and trades on an exchange like a stock. The fund aims to replicate the performance of the Rogers International Commodity Index — Agriculture Total Return. This index is a well-known commodity benchmark and represents the value of a group of roughly 20 agricultural commodities futures. As an ETN, RJA exposes investors to credit risk. RJA is used by some investors as a short-term tactical investment tool to gain exposure to agricultural commodities. RJA's relatively low volume and occasional wide spreads may be cause for concern for investors. The top three holdings of RJA are futures contracts of wheat, corn, and cotton.

Teucrium Corn Fund (CORN)

  • Performance Over One Year: 23.1%
  • Expense Ratio: 1.14%
  • Annual Dividend Yield: N/A
  • Three-Month Average Daily Volume: 475,039
  • Assets Under Management: $303.6 million
  • Inception Date: June 9, 2010
  • Issuer: Teucrium

Like WEAT above, CORN is structured as a commodity pool, allowing investors to pool assets to invest in commodity futures contracts. Corn is one of the most important agriculture products globally and is used as feed, fuel, starch, sweetener, and even plastic. Investors may find CORN appealing as a hedge against inflation or simply as a tactical tilt toward a specific segment of the agricultural market within a broader portfolio. The fund’s holdings are composed solely of corn futures contracts of multiple maturities.

The comments, opinions, and analyses expressed herein are for informational purposes only and should not be considered individual investment advice or recommendations to invest in any security or adopt any investment strategy. While we believe the information provided herein is reliable, we do not warrant its accuracy or completeness. The views and strategies described in our content may not be suitable for all investors. Because market and economic conditions are subject to rapid change, all comments, opinions, and analyses contained within our content are rendered as of the date of the posting and may change without notice. The material is not intended as a complete analysis of every material fact regarding any country, region, market, industry, investment, or strategy.

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