Monday, November 2, 2009

Wheat Prices Continue To Drop: ETFs and ETNs

Bloomberg reports today that wheat prices continues to sink, in the biggest weekly drop since December may be just the start of a fourth-quarter slump as the biggest harvests on record turn this year into the worst for prices since 1990.

Please note that we computed the correlations among commodity ETFs this weekend.

Says the article:

"Wheat will decline 13 percent to $4.30 a bushel in Chicago by the end of December, according to Emmanuel Jayet, head of agricultural-commodities research at Societe Generale in Paris. Prices had staged the biggest October rally in at least 50 years, rising 26 percent to $5.7475 on Oct. 23, after rain delayed U.S. planting. Last week’s 9.8 percent drop shows the gains were “overdone,” Jayet said.

Global output rose 12% to a record 682.3 million metric tons in the year through May and will total 668.1 million in the current season, the second-most ever, the U.S. Department of Agriculture said Oct. 9. The surplus will likely lower costs for General Mills Inc., the maker of Cheerios cereal, and reduce profit for flour millers including ConAgra Foods Inc.
“Inventories are more negative for wheat than just about any other commodity in the world,” said John Brynjolfsson, the chief investment officer of hedge fund Armored Wolf LLC in Aliso Viejo, California. “There is a glut.”

Wheat ETFs and ETNs:

-PowerShares DB Agriculture ETF (DBA), holds 25% of corn, soybeans, sugar, and wheat.
iPath Dow Jones AIG-Agriculture ETN (JJA): soybeans (31%), wheat (20%), corn (16%) plus 4 other commodities.

-Elements Linked to the Rogers International Commodity Index – Agriculture ETN (RJA): has 20 different agriculture commodities, the top are wheat (20%), corn (14%), cotton (12%), soybeans (9%).

-iPath Dow Jones AIG-Grains ETN (JJG), 3 commodities: soybeans (46%), Wheat (30%), and corn (24%).

-Elements Linked to the MLCX Grains Index ETN (GRU) : wheat (47%), corn (36%), soy meal (10%), and soy beans (8%).

Note: You may receive technical analysis and alerts of these ETFs, sent automatically to you, by entering the symbols in the Technical Trend Analysis Tool, (powered by INO).

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1 comment:

Deming said...

Symbol Average volume (1 month)

DBA 2,726,000
JJA 15,107
RJA 492,393
JJG 52,292
GRU 50,442


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