5 ETFs To Profit From Higher Food Prices

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As economies across the world recover strongly from the COVID-19 lows on wider reach of vaccines and rollback of pandemic-related measures, rising food prices have become a major concern. This is especially true as world food prices in May rose at their fastest monthly rate in more than a decade.

The Food and Agriculture Organization’s food price index, which measures monthly changes for a basket of cereals, oilseeds, dairy products, meat and sugar, hit the highest level since September 2011 and represented the 12th consecutive monthly increase. The cereal price index rose 6% in May month-on-month led by maize price surge while vegetable oil price index jumped 7.8% driven by rising palm, soy and rapeseed oil quotations.

The sugar index increased 6.8% largely due to harvest delays and concerns over reduced crop yields in Brazil, the world's largest sugar exporter. The meat index rose 2.2% with quotations for all meat types buoyed by a faster pace of import purchases by East Asian countries, mainly China. Dairy prices grew 1.8% on a monthly basis buoyed by solid import demand for skimmed and whole milk powders.

Given this, investors could easily make some profit from surging food prices through a number of ETFs or ETNs with lower risk. Any of these products could make for a good choice if the current trends continue given that these have a Zacks ETF Rank #3 (Hold).

Invesco DB Agriculture Fund (DBA - Free Report)

This ETF tracks the DBIQ Diversified Agriculture Index Excess Return, which is a rules-based index composed of futures contracts on some of the most liquid and widely traded agricultural commodities. It has key holdings in corn, soybeans, sugar, coffee, wheat and lean hogs with double-digit exposure each. The fund charges 94 bps in annual basis and trades in volume of 1.4 million shares a day. It has amassed $995.1 million in its asset base.

Teucrium Agricultural Fund (TAGS - Free Report)

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