Best Agricultural Commodity ETFs for Q1 2022

CORN, RJA, and DBA are the best agricultural commodity ETFs for Q1 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 slightly underperformed the broader market over the past year.
  • The agricultural exchange-traded funds (ETFs) with the best one-year trailing total returns are CORN, RJA, and DBA.
  • The top holdings of these ETFs are futures contracts for corn, wheat, and coffee, respectively.

Five 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.

Agricultural commodities, as measured by the S&P GSCI Agriculture Index, have slightly underperformed the broader market over the past 12 months, with a total return of 38.9% compared with the S&P 500’s total return of 40.4%, as of Nov. 3, 2021.

The best-performing agricultural commodity ETF for the first quarter (Q1) of fiscal year (FY) 2022, based on performance over the past year, is the Teucrium Corn Fund (CORN).

We examine the three best agricultural commodity ETFs below. All numbers are as of Nov. 3, 2021.

Teucrium Corn Fund (CORN)

  • Performance Over One-Year: 61.2%
  • Expense Ratio: 2.19%
  • Annual Dividend Yield: N/A
  • Three-Month Average Daily Volume: 163,253
  • Assets Under Management: $131.0 million
  • Inception Date: June 9, 2010
  • Issuer: Teucrium

CORN 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. Corn 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.

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

  • Performance Over One-Year: 47.3%
  • Expense Ratio: 0.75%
  • Annual Dividend Yield: N/A
  • Three-Month Average Daily Volume: 95,330
  • Assets Under Management: $135.7 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 considered a well-known commodity benchmark and represents the value of a group of 20 agricultural commodities futures.

As an ETN, RJA exposes investors to the credit risk of the issuing institution but avoids issues related to tracking error. With its narrow focus, RJA is typically used as a short-term tactical investment tool to gain exposure to the agricultural commodities space.

The top three holdings of RJA are futures contracts of wheat, corn, and cotton.

Invesco DB Agriculture Fund (DBA)

  • Performance Over One-Year: 33.6%
  • Expense Ratio: 0.94%
  • Annual Dividend Yield: N/A
  • Three-Month Average Daily Volume: 818,074
  • Assets Under Management: $938.6 million
  • Inception Date: Jan. 5, 2007
  • Issuer: Invesco

DBA tracks the DBIQ Diversified Agriculture Index Excess Return, an index composed of futures contracts of some of the most liquid and widely traded agricultural commodities. DBA also generates interest income from its holdings of primarily U.S. Treasury securities.

DBA is structured as a commodity pool. As a targeted fund, DBA is typically utilized to implement a short-term tactical tilt.

Not including collateral, the top holdings of DBA include futures contracts for coffee, sugar, and corn.

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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