This evening, I was perusing the Powershares DB Agricultural Fund (NYSEARCA:DBA). It is an ETF that replicates the agricultural components of Deutsche Bank's commodity index by purchasing corn, soybeans, sugar and wheat futures. The four commodities are equally weighted.
I am bullish long-term on commodities, and with the news from the US Department of Agricultural Department that the stocks-to-use ratio for corn is expected to be the second lowest in 50 years, I thought it might be a good time to consider an investment in ag commodities.
Since DBA only began trading this month, there was no long-term graph of the ETF. So I created one. Below is a rough approximation of an equal weighted index for the spot prices of the four commodities:
There were several gaps in the data, with three of the commodities missing one to four months of closing prices. To compensate, I filled the gaps by assuming that the last available closing price was the closing price on the missing days. Looking at the raw data, the gaps might accentuate the index slightly, but I think it is safe to assume that the graph approximates an index of spot prices. If I find the missing data, I will update and re-post this chart.
It looks to me that it might be a good time to let the index take a breather. It has moved up ~30% since October and looks like it is either consolidating or putting in a near term top. I'll be keeping it on my radar though. With any luck, we'll get a break and a buying opportunity.
As for the components, soybeans are at a 52 week high, corn and wheat are near 52 week highs and sugar is pushing a 52 week low.