World Food Sub-Index Prices

Sometimes I just don’t know when to leave well enough alone, particularly when it involves that Holy Grailesque quest to cram every potentially relevant piece of data into one overcrowded chart.

Yesterday’s Chart of the Week: World Food Prices is an example of a relatively uncluttered chart that attempts to make one or two simple points in a relatively clear and concise manner. After some back and forth with several readers, I have elected to butcher that simplicity and unveil a chart which adds the five sub-indices: meat; dairy; cereal; oils and sugar. The result, which I have appended below, shows that the real wild card in world food prices has been sugar, which is represented on the chart by the green line. To a lesser extent, cereal, dairy and oil have had their moments of extreme price fluctuations. By far the least volatile of the five sub-groups has been meat.

For those who are looking beyond futures to ETPs which can replicate some of these commodity sub-indices, there are a number of broad-based agricultural ETFs which cover most or all of the sub-indices. The popular PowerShares DB Agriculture Fund (DBA) is by far the most liquid of the group. Alternatives to DBA include RJA, JJA, FUD and UAG. For investors looking to target grains, JJG and GRU are worth investigating, as is the corn-specific ETP, CORN. For the sugar sub-index, SGG is an excellent match. JJS is an ETP for the ‘softs’ space and is almost equally weighted between coffee, cotton and sugar. Finally, both COW and UBC are potential proxies for the meat sub-index.

Related posts:

• Chart of the Week: World Food Prices
• Wheat and the Commodity ETF Space
• LSC Long-Short Commodities ETF Struggling Mightily
• Chart of the Week: Impact of Falling Euro on Stocks and Commodities
• Chart of the Week: Commodities and the Dollar
• Chart of the Week: Breaking Out Recent Commodities Moves
• CME to Use VIX Methodology for New Crude Oil, Corn, Soybean and Gold Volatility Indices
• Agricultural Commodities vs. Base Metals
  

[source: United Nations]

Disclosure(s): long CORN and SGG at time of writing

Wheat and the Commodity ETF Space

Anyone with even a passing interest in commodities has no doubt taken notice that the worst drought in Russia in at least 50 years, coupled with climatological excesses around the globe which have created a substantial disruption in the supply of agricultural commodities, most notably in wheat.

The graphic below from ETFreplay.com summarizes some of the impact on selected commodity ETFs and ETNs over the course of the past week. Note that JJG, the iPath Dow Jones-UBS Grains Total Return Sub-Index ETN, is up 9% in the past week and broader commodity and agricultural ETFs such as RJA and DBC have also been lifted significantly by the surge in agricultural futures prices.

In addition to JJG, investors looking for a grain-specific ETF/ETN may also wish to check out GRU, the ELEMENTS MLCX Grains Index Total Return ETN. As noted last Friday, investors can also take a long position in grains by shorting the ELEMENTS S&P Commodity Trends Indicator ETN (LSC), where 36.8% of the ETN is currently short grains.

For more on related subjects, readers are encouraged to check out:

• LSC Long-Short Commodities ETF Struggling Mightily
• Chart of the Week: Impact of Falling Euro on Stocks and Commodities
• Chart of the Week: Commodities and the Dollar
• Chart of the Week: Breaking Out Recent Commodities Moves
• CME to Use VIX Methodology for New Crude Oil, Corn, Soybean and Gold Volatility Indices

[source: ETFreplay.com]

Disclosure(s): long JJF and short LSC at time of writing