Ag ETFs Jump With Russia-Ukraine Conflict

March 03, 2022

Russia’s invasion of Ukraine has sparked conflict in Europe’s breadbasket, driving already-inflated prices for agriculture ETFs to multiyear highs. 

The Teucrium Wheat Fund (WEAT) closed trading on Wednesday at $9.58 per share, the highest since June 2016, while the Teucrium Corn Fund (CORN) closed at $25.23 per share to reach highs not seen since July 2015. 

Both funds hold contracts along the futures curve except for the closest month for delivery. 

Several other broad agriculture ETFs like the Invesco DB Agriculture Fund (DBA), the iPath Series B Bloomberg Grains Subindex Total Return ETN (JJG) and the iPath Series B Bloomberg Agriculture Subindex Total Return ETN (JJA) have climbed higher in recent days and into double-digit return territory year-to-date. 

The five funds combined only hold about $1.6 billion in assets, in part because several carry high expense ratios or are commodity pools that require additional tax management. 

Russia and Ukraine are among the 10 largest producers of wheat in the world and combined are responsible for nearly a third of global exports, according to data from the United Nations Food and Agriculture Organization. 

Ukraine was also the fourth-largest single-nation producer of corn, according to U.S. Department of Agriculture estimates, growing 35.89 metric tons of the crop between 2019 and 2020 versus 66.74 metric tons grown within the 28-member European Union. 

Ukraine’s ports closed earlier this week under threat of attack by Russian naval forces, and it’s not clear if Russian crops can be exported when most of Russia’s banking system is under sanction by Western governments. 

While the amount of unshipped wheat supplies stuck in Ukraine is likely small, farmers could find it difficult to harvest and ship their winter wheat crops later this spring, said Todd Hultman, an analyst at the commodities information provider DTN. 

“Russia's attack adds to inflationary pressures in the West, disrupts shipping in the Black Sea region … and may disrupt the ability of Ukrainian farmers to plant and harvest crops in 2022, depending on how events unfold,” he said. 

 
Contact Dan Mika at [email protected], and follow him on Twitter 

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