3 ETFs To Fight Surging Food Inflation

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Inflation is now running at its 40-year high, and the food index is one of the three biggest contributors lately. Prices of food items that we buy regularly had been climbing due to supply chain disruptions caused by the pandemic and rising labor costs.

The war in Ukraine then sent food prices surging at their fastest pace ever. Russia and Ukraine are major exporters of grains and they together account for more than a quarter of the global trade in wheat, and a fifth in corn. Ukraine is also the biggest exporter of sunflower oil.

As the war has entered its third month, Ukrainian farmers will miss critical planting and harvesting seasons. Further, many farmworkers are now fighting the war.

Russia and its ally Belarus are also the world’s major fertilizer exporters. In addition to sanctions, the spike in energy prices have raised production and transportation costs of fertilizers, raising the possibility of continued surge in food prices.

Many countries have resorted to food protectionism amid rising shortages. India—the world’s second-largest producer of wheat, banned its export recently. Indonesia, which produces more than half of the world’s palm oil, had banned its export earlier.

Turkey has halted shipments of grains, oilseeds, cooking oil, and a few other agricultural commodities. Export restrictions are making food prices even more expensive.

The VanEck Agribusiness ETF (MOO - Free Report) invests in companies that derive more than 50% of revenues from agribusiness. In addition to supply headwinds arising from the pandemic and Ukraine conflict, global population growth that is driving increasing food demand and the need for efficient agricultural solutions will benefit this ETF.

The fund has over $1.9 billion in assets and charges 0.56% in expense ratio. Bayer (BAYRY - Free Report) and Deere (DE - Free Report) are its top holdings.

The iShares MSCI Global Agriculture Producers ETF (VEGI - Free Report) tracks an index of global companies primarily engaged in the business of agriculture. The fund has $289 million in assets and has an expense ratio of 39 basis points. Deere & Company (DE - Free Report) and Nutrien (NE - Free Report) are its top holdings.

Invesco DB Agriculture Fund (DBA - Free Report) invests in futures on 10 popular agriculture commodities while aiming to minimize contango. The fund has $2.2 billion in assets and comes with an expense ratio of 93 basis points.

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James B. Paxton 1 year ago Member's comment

It appears its too late for these. price action has been lagging the market now for a few months.