At long last, the ETF issuer, Teucrium, has gone ahead with the launch of three new funds in the agricultural space. They include ETF’s for wheat (NYSEARCA:WEAT), soybeans (NYSEARCA:SOYB), and sugar (NYSEARCA:CANE). Teucrium made a splash a year and a half ago when it brought out the corn ETF (NYSEARCA:CORN) just before a doubling of prices for this key commodity. Needless to say, I flogged readers into buying (CORN), making it one of my most profitable trades for the year (click here for “Going Back Into the Ags” ).
The company had planned to launch these new funds much earlier, but claim it was held up by approvals from the SEC. I think they also wanted to road test (CORN) before expanding their offerings. Other commodity based ETF’s have been bedeviled by contango problems that have created enormous tracking errors, such as with the United States Oil Fund (NYSEARCA:USO) and the United States Natural Gas Fund (NYSEARCA:UNG). “Contango” occurs when far month futures contracts trade at large premiums to front months, creating an arbitrage for hedge funds at the expense of ETF investors.
The new funds will be structured as limited partnerships. That means that investors can expect form k-1’s detailing gains and losses for their tax returns.
The new family of ag ETF’s will be a welcome addition to the panoply of instruments investors can employ in the space. You all well know that I am a long term bull in this sector, as the world is making people, some 175,000 a day, faster than the food to feed them. And if your trade doesn’t work out, you can always take delivery and eat your position.