Agriculture industry sources have been reporting downward trends across all agricultural commodities in 2017. Leading global agriculture industry source The World Bank, reported agriculture prices down 0.6% for 2017 in their October commodities outlook. While prices have been trending lower in 2017, The World Bank is reporting improvements expected for 2018. Projected price increases in agriculture are currently estimated at 1.2%. Global supply and demand for agriculture commodities will continue to be the leading factors for price changes. (See also: A Primer For Investing In Agriculture.) The World Bank is estimating lower supply will be a key influence for 2018 prices.

The following three agriculture exchange-traded-funds (ETFs) are worth watching this year. They were selected based on assets under management as of October 30, 2017. They are currently three of the largest ETFs in the agriculture category. Data for the funds is as of October 30, 2017.

1. PowerShares DB Agriculture ETF (DBA)

This ETF is tied to the DBIQ Diversified Agriculture Index Excess Return. Note that the ETF will track changes in the Index whether they are positive or negative. This means an investor will have no protection against declining commodities performance in the event there is a downturn. If you invest in this ETF, you should watch the performance of commodities themselves to get an idea of how the ETF will perform.

With net assets of over $700 million, DBA is very liquid. You should be able to buy and sell shares of this ETF fairly easily.

Avg. Volume: 736,750

Net Assets: $727.7 million

Yield: 0.00%

YTD Return: -3.15%

Expense Ratio: 0.89%

Inception Date: January 5, 2007

2. ELEMENTS Rogers Intl Cmdty Agri TR ETN (RJA)

RJA uses the Rogers International Commodity Index – Agriculture Total Return as its benchmark. It tries to replicate the performance of that index. It does this by investing in a basket of 20 futures contracts that are based on agricultural commodities.

Investing in this fund is the equivalent of investing in those 20 contracts. You should understand how futures contracts work if you are going to buy shares in this fund. (See also: Futures Fundamentals: How The Market Works.)

Avg. Volume: 39,188

Net Assets: $94.9 million

Yield: 0.00%

YTD Return: -3.80%

Expense Ratio: 0.75%

Inception Date: October 17, 2007

3. iPath Bloomberg Grains SubTR ETN (JJG)

This fund will give you exposure to the Dow Jones-UBS Grains Subindex Total Return Service Mark. This index is based on futures contracts in grains. The Index contains three futures contracts. An investment here is a play on those three contracts. You should understand the contracts involved if you are going to invest in JJG. Review the prospectus and familiarize yourself with how those contracts work.

Avg. Volume: 52,905

Net Assets: $88.1 million

Yield: 0.00%

YTD Return: -10.02%

Expense Ratio: 0.75%

Inception Date: October 23, 2007

It should be pointed out that these funds may invest in exchange-traded notes (ETNs), which are debt issued by banks based on the performance of an index. The price of an ETN depends on the performance of the index that is being tracked.

Short Strategies

Given the volatility in commodities and commodity prices, investors may also want to consider short strategies. Examples of the strategies include the DB Agriculture Double Short ETN (AGA) and the DB Agriculture Short ETN (ADZ). Reported returns YTD are 19.20% for AGA and 8.19% for ADZ. These funds are not actively traded however they exemplify the success of potentially taking short positions to benefit from decreasing agriculture commodity prices. (See also: DAG vs. AGA: Comparing Leveraged Agriculture ETFs.)

The Bottom Line

Commodities are a risky investment. Everything from the weather to political upheaval can affect how commodities perform. Your investment in any of these ETFs should be accompanied by a commitment to continued due diligence on the ETFs and monitoring of commodities prices on a regular basis.

Want to learn how to invest?

Get a free 10 week email series that will teach you how to start investing.

Delivered twice a week, straight to your inbox.