Corn, Wheat Declines May Create Opportunity for Commodity ETF

Invesco’s DBA had $314 million in outflows this year, and has lost ground over the past decade.

Reviewed by: Lisa Barr
Edited by: Ron Day

How does an investor harvest the bounty in agricultural commodities? 

One route is the Invesco DB Agriculture Fund (DBA), which invests in indexes that move higher and lower with agricultural commodity prices.  

In 2022, CBOT corn and soybean futures prices rose to the highest in a decade due to drought. That same year, coffee and cotton reached multiyear highs, and soft red winter wheat futures, the main bread ingredient, moved to a record high.  

This year, sugar and cocoa futures moved to the highest prices in years, while cattle futures rose to record peaks. 

Invesco Commodity ETF 

DBA is a broad-based and liquid product with exposure to these agricultural commodities. After reaching the highest price in years in May 2022, DBA has moved lower, and fund flows have been negative this year.  

The USDA’s monthly World Agricultural Supply and Demand Estimates Report provides a snapshot of U.S. and global supply and demand fundamentals for most agricultural products. The August WASDE report provided no surprises, causing prices to move mostly lower as the USDA forecasted enough products to satisfy worldwide demand.  

Sal Gilbertie, CEO of agriculture ETF firm Teucrium Trading, said in an interview that the USDA took a leap of faith regarding the ongoing war in Europe’s breadbasket and its impact on worldwide grain and agricultural commodity supplies. 

“If Black Sea shipping lanes remain open, grain markets around the world are set to be well supplied,” he said. “Markets remain quiet but vigilant with regard to the Black Sea war and further development of U.S. crops.”  

DBA Is a Liquid Product 

At $21.34, DBA has $838 million in assets under management. The fund trades more than 601,000 shares daily and has a 0.91% expense ratio.  

DBA has been around since 2007, reaching a record $43.50 per share high in February 2008, when commodity prices peaked before the global financial crisis. In 2011, The ETF rose to a lower high as agricultural prices peaked again.  

A Correction Since the 2022 High 

Post-pandemic supply chain issues and the war in Europe’s breadbasket caused DBA to rise to a $23.01 per share high in May 2022.  


DBA Total Returns 2022 to 2023



After reaching the May 2022 peak, DBA fell more than 16% to $19.25 in January 2023 before making higher lows and higher highs and rising to $21.38 on Aug. 18. Since the fund has not eclipsed the 2022 high, it remains in a bearish long-term trend as of mid-August 2018.  

Fund Flows Tool Shows Significant Outflows 

Market participants have shunned DBA in 2023 as funds have flowed out of the product.  





The Fund Flows Tool chart shows the nearly $345 million outflow from DBA in 2023. Since June 1, more than $90 million has flowed out of DBA.  

Buy DBA on the Dip? 

DBA is a contrarian investment, given the fund flows and recent declines in many agricultural commodity prices. However, the following compelling factors support buying DBA on the dip: 

  • War in Ukraine has turned fertile growing regions into minefields and the critical logistical hub at the Black Sea Ports into a war zone. Russia withdrew from a crucial grain deal, allowing Ukrainian agricultural products to flow from the ports, threatening worldwide supplies over the coming months and years.  
  • Russia has used energy and agricultural products as economic weapons against countries supporting Ukraine. Russia is the world’s leading wheat producer and exporter. Russia and Ukraine are also leading corn producers and exporters. Corn feeds and increasingly powers the world as it is a primary ingredient in ethanol production.  
  • The worldwide population has topped 8 billion, so other producing countries are pressured to increase output.  
  • Inflation remains elevated, increasing production costs for farmers, food processors and other members of the agricultural supply chain.  
  • DBA owns products creating diversified exposure to agricultural commodities. Since the 2008 high, the bearish trend has a technical resistance level at the May 2022 $23.01 high. Moving above that level would be a bullish technical breakout that could cause funds to flow into DBA rapidly.  

Agricultural commodities feed and increasingly power the world, as addressing climate change involves more biofuel production. DBA is a contrarian play on staple commodities as demand grows and supplies are subject to an international conflict that could disrupt supply chains.  

Andrew Hecht is a Nevada-based writer and analyst covering stocks, bonds, foreign exchange, cryptocurrency and raw material markets. He has over four decades of experience in markets across all asset classes, concentrating on commodity markets. Hecht was a senior trader at Salomon Brothers in the 1980s and 1990s, running sales and trading businesses. In 2013, McGraw Hill published his book, “How to Make Money in Commodities."