Commodity Futures Outperforming Stocks

July 08, 2010


PowerShares DB Agriculture Fund (DBA)

The PowerShares DB Agriculture Fund tracks the agriculture subset of the Deutsche Bank Liquid Commodity Index and holds futures contracts on some of the most liquid and widely traded agricultural commodities. Last year, the DBA fund struggled with position limits and contango, but eked out a 0.9 percent gain. Year-to-date for 2010, DBA is down 8.8 percent.

Live Cattle (CME: LC); weight in DBA: 13.6 percent

A point-to-point glance at last year's spot cattle prices would seem to indicate a flat market, as live cattle opened and closed 2009 at 86.05 cents a pound. However, there was a lot of interim price volatility that's likely to be repeated this year. So far, live cattle prices are up 4.4 percent in 2010, as the market heads into the summer—a time when beef prices typically spike higher.

Coffee "C" (ICE: KC); weight in DBA: 13.4 percent

Recent reports of a steep decline in global supplies from the International Coffee Organization spooked short sellers in the London robusta market and set the dominos in motion for higher-quality Arabica prices to spike. So far in 2010, coffee prices are up 20.8 percent. In 2009, spot prices rose 21.3 percent for the year.

Soybeans (CBT: S); weight in DBA: 12.4 percent

The grain markets got a shot in the arm from a USDA stocks report indicating a 400-million bushel shortfall from previous corn expectations. But despite being often lumped in with corn and wheat, soybeans are oilseeds, not grains. While corn and wheat prices rocketed—and stayed—up, bean prices faltered. For the year, spot bean futures have fallen 15.1 percent, after rising 6.8 percent in 2009.

Cocoa (ICE: CC); weight in DBA: 11.1 percent

Soft commodities tend to be some of the futures market's most volatile elements. Relatively speaking, though, cocoa prices have been fairly stable, after a sell-off in February. For the year, spot cocoa is down 9.6 percent on the heels of its 23.5 percent gain in 2009.

Corn (CBT: C); weight in DBA: 11.0 percent

A recent spike in corn prices brought on by the first of what are thought to be many Chinese buying forays into the corn market signaled maize's readiness to rally after weeks of grinding decline. Then, a surprisingly bullish USDA stocks report sent corn prices soaring even higher. Still, corn's not above water for the year. To date, prices have fallen 11.9 percent. Last year, spot corn eked out a 1.8 percent gain.

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