As extreme weather conditions impact farming worldwide, the prices of agricultural commodities are on the rise. And with the USDA lowering its production forecasts, food inflation is expected to climb further in the coming months. This could drive the performance of commodities like coffee, wheat, and corn. Hence, commodity ETFs Teucrium Corn (CORN), iPath Series B Bloomberg Coffee Subindex Total Return (JO), and Teucrium Wheat (WEAT) could be solid bets now. So, please read on for a discussion of these funds.Extreme weather conditions worldwide have been reducing agricultural commodity yields, leading to a spike in food prices. Rising temperatures and debilitating droughts in the Dakotas and Central Canada have pushed wheat prices up to their highest level in nearly eight years.
As dry conditions hamper production, the United States Department of Agriculture (USDA) expects wheat production for the 2021-22 marketing year to be 1,697 million, down 49 million bushels from its July forecast. This has sparked a rally in the commodity futures market, with Wheat futures rising to their highest level last week since May. Corn futures also gained momentum after the USDA slashed its supply and yield forecast for the commodity. Coffee prices are also on the rise, driven by the devastating frost in Brazil. And as restaurants reopen, growing demand along with constrained supply will surely translate to further price increases. Furthermore, a rise in freight costs due to pandemic-related shipping disruptions and a shortage of shipping containers could push prices to multi-year highs in the coming months. Therefore, coffee, corn, and wheat futures are positioned to skyrocket.
With this in mind, we think it could be wise to invest in commodity ETFs Teucrium Corn Fund (CORN), iPath Series B Bloomberg Coffee Subindex Total Return ETN (JO), and Teucrium Wheat (WEAT).