A Troubling Scientific Finding Targets Top Holding in Agribusiness ETF

Includes: DBA, MON, MOO
by: Don Dion

The troubling results found in a new scientific paper may send the Market Vectors Agribusiness ETF (NYSEARCA:MOO) down a rocky ride in the near future.

This week a report by three French scientists, published in the International Journal of Biological Sciences, came to light, highlighting serious health risks associated with the consumption of Monsanto’s (NYSE:MON) genetically engineered corn. In the study, the researchers found that the modified crop was linked to organ damage in rats.

Monsanto is the third largest holding in MOO, accounting for nearly 8% of the total portfolio.

Monsanto immediately offered a rebuttal on its website, discounting the quality of the study’s methods. During Wednesday trading, when the news was announced, the firm’s shares gained 0.4%.

Although the disturbing news appeared to center only on Monsanto’s corn, there is a possibility that other firms may soon come under the microscope. While unearthing the risks of genetically modified foods is ultimately beneficial for the health of the consumer, firms responsible for producing any products found dangerous will likely take a hit.

Other top holdings in MOO include Wilmar International, Mosaic (NYSE:MOS), Syngenta (NYSE:SYT), Potash of Saskatchewan (NYSE:POT), and Deere (NYSE:DE).

While the odds are slim that this scandal will escalate into something that harms MON to the extent that MOO is harmed also, investors should be aware of this risk. As an alternative to investing in agribusiness via MOO, investors that anticipate a rise in agricultural commodity prices should consider PowerShares DB Agriculture Fund (NYSEARCA:DBA).

This fund tracks an index of some of the most widely traded agricultural commodities such as sugar, corn, wheat, soybeans, and live cattle.

Disclosure: MOO

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