VanEck's MOO Offers Exposure to Agricultural Sector

VanEck's MOO Offers Exposure to Agricultural Sector

From the war in Ukraine and to a potentially weaker U.S. dollar, several situations around the world point to higher prices for this ETF.

Reviewed by: Staff
Edited by: Mark Nacinovich

The VanEck Agribusiness ETF (MOO) owns shares in companies involved in farming and farming-related commercial activities. 

The fund’s portfolio includes agrichemicals, animal health, fertilizers, seeds, farm and irrigation equipment and machinery, aquaculture and fishing, livestock, cultivation, plantations and agricultural trading companies. 

At around $78 per share on Oct. 10, MOO has almost $1 billion in assets under management. The liquid product trades an average of 47,263 shares daily and charges a 0.52% management fee. MOO’s latest blended $1.85 dividend translates to a 2.35% yield.  

The agribusiness sector feeds and increasingly fuels the world. Given the geopolitical landscape, MOO is a product that could experience explosive growth over the coming years.  

MOO is a multinational ETF with over 60% of its assets invested in U.S. companies. 

top 10 countries

The chart highlights the dominant investment in U.S. companies, but MOO has exposure to companies in countries worldwide involved in agricultural commodities and related businesses.  

The top 10 holdings are diversified agribusiness companies. 

top 10 holdings

As the chart shows, MOO has nearly 8% exposure to Deere & Co., a leading farm equipment manufacturer. Archer Daniels Midland and Bunge Ltd., two U.S. multinational agricultural producing and processing companies, account for over 9% of its holdings. Many of the U.S. companies have extensive global footprints.  

Big Rally Since 2020 Lows 

When the global pandemic gripped markets across all asset classes in 2020, MOO fell to a low of $42.52 per share.  

Price chart

Falling corn, soybean, wheat, and other grain and oilseed prices since the 2022 peaks have put downward pressure on MOO. The Fund Flows Tool shows that $233 million has flowed out of MOO since the end of 2022.  

While the agricultural sector has compensated for any losses from Europe’s breadbasket, prices have declined to levels that could be significant bottoms for the coming years.  

4 Reasons to Buy MOO for 2024 

At least four factors support agribusiness investment and MOO as we head into 2023’s final quarter and the coming year. 

  • The war in Ukraine is continuing to rage. The region’s agricultural products flow could decline next year if the conflict escalates, threatening worldwide food supply chains. Higher grain and oilseed prices favor higher share prices for agribusiness companies and MOO. 
  • The bifurcated geopolitical landscape creates trade barriers that distort prices. The Chinese/Russian alliance, which includes Iran, North Korea, and other allies, could cause increasing worldwide tensions that prevent the flow of commodities from producers to consumers, creating supply shortages and higher prices.  
  • The rising potential for a BRICS, or Brazil, Russia, India, China and South Africa, currency may cause a decline in the U.S. dollar’s dominant role in the worldwide financial system. The U.S. dollar has been the world’s reserve currency since the end of World War II. A competing currency for world trade could cause a weaker dollar and higher commodity prices, leading to higher profits for agribusinesses.  
  • As the U.S., Europe and their allies address climate change, biofuel demand is increasing. Ethanol, biodiesel, and other agricultural commodity-based fuels increase the demand side of the already tight fundamental equation for these commodities. Many companies owned by MOO are involved in processing agricultural commodities into biofuel. Increasing refining margins will likely push profits and share prices higher.  

MOO has pulled back from the 2022 record high but remains significantly above the 2020 low. With the price below $80, it is the perfect time to consider adding agribusiness exposure to portfolios via the diversified MOO product.  

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."