In this article, we discuss 11 best agriculture ETFs to buy. If you want to skip our discussion on the agriculture industry, head over to 5 Best Agriculture ETFs To Buy.
The World Bank’s food price index saw a decline throughout 2023, averaging 9% lower than in 2022 due to robust harvests, despite the termination of the Black Sea Grain Initiative, some trade restrictions, and El Niño. Forecasts indicate a continued decrease in global food prices in 2024 and 2025, by 2 and 3 percent respectively, as worldwide supply improves. It is anticipated that global grain supplies will recover by 42 million metric tons in 2023-24, propelled by heightened maize exports but offset by declines in wheat and rice exports. There is an expectation of a 75 million metric ton increase in oilseed supply, particularly in soybean production surpassing the previous season’s record, predominantly in Brazil. The stock-to-use ratio for the food aggregate is expected to stay steady, indicating sufficient supply conditions.
Agricultural projections are shaped by factors such as extreme weather events and economic concerns, both domestically and internationally. The USDA’s World Agricultural Supply and Demand Estimates report, which offers a forecast for agricultural markets over the next 12–18 months, highlighted that while demand for US meat remains strong, there has been a decrease in cattle numbers due to drought and high production costs. However, growth is anticipated in the pork and poultry industries. The outlook for livestock prices in 2024 is mixed, with an expected increase in beef and pork prices but a decline in prices for broilers and turkeys. Shifts in acreage appear to have a greater impact on crop production than ongoing drought conditions, with an increase in corn acreage and production but a decrease in soybean area and production. Changes in corn and soybean usage and exports impacted stocks and prices for both the 2022/23 and 2023/24 crop years. Overall, the outlook for US agriculture in 2024 indicates lower prices, mixed export and production trends, and declining incomes compared to previous years.
The United States is actively supporting its agricultural sector in reclaiming lost overseas markets, particularly against competitors like Brazil and Russia. Agriculture groups have applied for over $900 million in aid under the $1.3 billion Regional Agricultural Promotion Program, which aims to help US farmers access new markets for their crops. With Brazil surpassing the US as the top exporter of corn and soybeans, and Russia leading in wheat exports, the US is striving to regain its competitive edge. Daniel Whitley, administrator of the USDA’s Foreign Agricultural Service, emphasized the importance of providing tools for success to US farmers during the National Grain and Feed Association annual convention. The RAP program aims to assist in expanding market reach, particularly targeting Southeast Asia, the Middle East, and Africa for new export opportunities. Whitley highlighted Africa as a promising market due to its growing population and middle class, stressing the need for US companies to establish a presence before it’s too late.
From America’s Midwest to the vast farmlands of India, farmers are facing challenges including unfair trade practices, fluctuating crop prices, extreme weather events, and an aging workforce. In the short term, these issues fuel protests, pose dilemmas for policymakers, and threaten to increase grocery prices. However, in the long term, they underscore the broader difficulties of feeding a growing population and addressing hunger crises globally. In the United States, the number of farms is declining as farmers age, and production costs continue to rise. Total farm production expenses have surged by 30% over the past few years, driven by increasing costs of labor, feed, and fertilizer. This trend has led to decreased spending on equipment due to declining crop prices. In India, the small-scale farming industry struggles with low yields and faces challenges from an unpredictable climate. Recent protests by frustrated farmers highlight their demands for debt relief and guarantees on crop prices. Similarly, farmers in Europe, particularly in regions like France, are grappling with rising input costs, trade agreements with countries with less stringent environmental regulations, and pressure from retailers to keep prices low. The EU’s push for carbon neutrality by 2050 further complicates matters for farmers, who struggle to offset rising costs while maintaining profitability. Likewise, in West Africa, cocoa farmers are experiencing the impacts of climate change, with fluctuating weather conditions affecting cocoa bean production.
Despite the mixed headlines surrounding the agriculture industry, food will always be one of the safest bets for investors. Some of the top agriculture stocks to buy include Archer-Daniels-Midland Company (NYSE:ADM), Bunge Global SA (NYSE:BG), and CF Industries Holdings, Inc. (NYSE:CF). However, we discuss the best agriculture ETFs in this article.
Our Methodology
We curated our list of the best agriculture ETFs by choosing consensus picks from multiple credible websites. We have mentioned the 5-year share price performance of each ETF as of March 29, 2024, ranking the list in ascending order of the share price performance. We have also discussed the top holdings of the ETFs to offer better insight to potential investors.
Photo by onur ozkardes on Unsplash
Best Agriculture ETFs To Buy
11. First Trust Indxx Global Agriculture ETF (NASDAQ:FTAG)
5-Year Share Price Performance as of March 29: 6.27%
First Trust Indxx Global Agriculture ETF (NASDAQ:FTAG) aims to match the performance of the Indxx Global Agriculture Index. This index includes securities from the agriculture sector, such as farmland companies and firms dealing with chemicals, fertilizers, seeds, irrigation equipment, and farm machinery. The fund was established on March 11, 2010. As of February 1, 2024, First Trust Indxx Global Agriculture ETF (NASDAQ:FTAG)’s expense ratio stood at 0.70%. The fund owns $10 million in net assets and its portfolio comprises 50 stocks as of March 28, 2024. It is one of the best agriculture ETFs to buy.
Deere & Company (NYSE:DE) is the largest holding of First Trust Indxx Global Agriculture ETF (NASDAQ:FTAG). Deere & Company (NYSE:DE) is a global manufacturer and distributor of equipment that operates across four segments – Production and Precision Agriculture, Small Agriculture and Turf, Construction and Forestry, and Financial Services. On February 28, the company declared a quarterly dividend of $1.47 per share, in line with previous. The dividend is payable on May 8, to shareholders on record as of March 29.
According to Insider Monkey’s fourth quarter database, 54 hedge funds were long Deere & Company (NYSE:DE), compared to 55 funds in the last quarter.
Like Archer-Daniels-Midland Company (NYSE:ADM), Bunge Global SA (NYSE:BG), and CF Industries Holdings, Inc. (NYSE:CF), Deere & Company (NYSE:DE) is one of the best agriculture stocks to invest in.
ClearBridge Large Cap Value Strategy made the following comment about Deere & Company (NYSE:DE) in its Q4 2022 investor letter:
“Our industrials holdings produced robust absolute returns for the quarter. While the ISM Manufacturing Index fell in November to contractionary levels, our industrial holdings have largely been able to maintain earnings due to strong competitive positions, historically large backlogs and company-specific drivers. For example, Deere & Company (NYSE:DE) continues to benefit from a strong upgrade cycle as record farmers’ income is driving broad and rapid adoption of the company’s precision agricultural equipment.”
10. Invesco Agriculture Commodity Strategy No K-1 ETF (NASDAQ:PDBA)
5-Year Share Price Performance as of March 29: 17.45%
Invesco Agriculture Commodity Strategy No K-1 ETF (NASDAQ:PDBA) is an actively managed ETF that invests in commodity futures, commodity-linked futures, and collateral closely tied to the agriculture sector. The fund seeks to outperform the DBIQ Diversified Agriculture Index Excess Return Index, which consists of futures contracts of the 11 most actively traded global agricultural commodities. Invesco Agriculture Commodity Strategy No K-1 ETF (NASDAQ:PDBA) ranks 10th on our list of the best agriculture ETFs. The fund was launched on August 24, 2022. As of March 27, 2024, the ETF’s expense ratio came in at 0.59%.
9. VanEck Agribusiness ETF (NYSE:MOO)
5-Year Share Price Performance as of March 29: 20.50%
VanEck Agribusiness ETF (NYSE:MOO) ranks 9th on our list of the best agriculture ETFs. The fund aims to closely replicate the price and yield performance of the MVIS Global Agribusiness Index, which includes companies involved in sectors such as agri-chemicals, animal health, fertilizers, seeds, farm equipment, aquaculture, livestock, cultivation, and trading of agricultural products. VanEck Agribusiness ETF (NYSE:MOO) was established on August 31, 2007. As of March 28, 2024, the ETF’s total assets amounted to $827.80 million, along with an expense ratio of 0.53%.
Corteva, Inc. (NYSE:CTVA) is one of the top holdings of VanEck Agribusiness ETF (NYSE:MOO). Corteva, Inc. (NYSE:CTVA) operates in the agriculture sector, and its operations are divided into two main segments – Seed and Crop Protection. On February 12, Loop Capital upgraded Corteva, Inc. (NYSE:CTVA) from Hold to Buy, citing the company’s promising earnings guidance. They raised the price target to $65 from $57 per share, estimating an enterprise value of 11.5 to 12 times EBITDA.
According to Insider Monkey’s fourth quarter database, 51 hedge funds were bullish on Corteva, Inc. (NYSE:CTVA), compared to 42 funds in the last quarter. Harris Associates is the largest stakeholder of the company, with 9 million shares worth $431.8 million.
Aristotle Value Equity Strategy stated the following regarding Corteva, Inc. (NYSE:CTVA) in its fourth quarter 2023 investor letter:
“Corteva, Inc. (NYSE:CTVA), the seed and crop protection company, was the largest detractor during the quarter. Following robust orders during the 2020-2022 period, customer destocking persisted throughout 2023, particularly in Brazil, causing Corteva to lower 2023 revenue and profit guidance to -2% and -3% year-over-year, respectively. While the crop protection business appears to be, in our view, at or near a cyclical bottom, the seed business remained resilient, with +14% year-over-year price/mix effects more than offsetting the 12% fall in volumes during the third quarter. We are encouraged by management’s actions, including further optimization of the crop protection business and Corteva’s FREE cash flow generation during this challenging period. Despite cyclical headwinds, the company continues to execute on catalysts we previously identified, including margin expansion via improved pricing and product mix, as well as reduced royalty expenses.”
8. First Trust Nasdaq Food & Beverage ETF (NASDAQ:FTXG)
5-Year Share Price Performance as of March 29: 24.29%
First Trust Nasdaq Food & Beverage ETF (NASDAQ:FTXG) seeks to track the performance of the Nasdaq US Smart Food & Beverage Index. The fund’s objective is to provide investment results that correspond to the price and yield of the index, before accounting for fees and expenses. First Trust Nasdaq Food & Beverage ETF (NASDAQ:FTXG) was established on September 20, 2016. As of March 28, 2024, the fund’s net assets exceed $57 million. It features a portfolio of 30 stocks and an expense ratio of 0.60%. First Trust Nasdaq Food & Beverage ETF (NASDAQ:FTXG) is one of the best agriculture ETFs to buy.
Archer-Daniels-Midland Company (NYSE:ADM) is the largest holding of First Trust Nasdaq Food & Beverage ETF (NASDAQ:FTXG). The company is involved in the procurement, transportation, processing, and merchandising of agricultural commodities, ingredients, and flavors worldwide. On March 13, Archer-Daniels-Midland Company (NYSE:ADM) commenced an accelerated share repurchase agreement to buy back $1 billion worth of its common stock. The transaction is anticipated to conclude by the end of the second quarter of 2024.
According to Insider Monkey’s fourth quarter database, 34 hedge funds were bullish on Archer-Daniels-Midland Company (NYSE:ADM), compared to 37 funds in the last quarter. Cliff Asness’ AQR Capital Management is the largest stakeholder of the company, with 2.19 million shares worth $158.6 million.
Horizon Kinetics stated the following regarding Archer-Daniels-Midland Company (NYSE:ADM) in its fourth quarter 2023 investor letter:
“There are the securities exchanges in our strategies, of course, which we’ve adequately covered. Also, ‘2nd tier’ varieties of asset-light businesses, like car dealerships (AutoNation and Penske Auto Group) and shipping brokers (Clarkson PLC and Braemar PLC). Less well reviewed have been a few companies that are asset intensive, but have particular inflation-beneficiary attributes.
One such is Archer-Daniels-Midland Company (NYSE:ADM), one of the largest agricultural commodities processors. They turn grains and legumes into flour, protein meals, oils, starches, syrups, cellulose pulp, what have you. Almost everything on a dinner plate came through, in some fashion, ADM’s hands. Yes, they have machinery, terminals, ships, railroad cars. And as an intermediary, theirs is a low-margin business. But it is a constant-spread business that earns a pretty stable margin on a very large sales base. When pricing rises for a period of time, that percentage spread is on a higher dollar amount, hence more dollars of income—so income can rise nicely when agricultural commodities do. And there is the opportunity to expand their margins somewhat…” (Click here to read the full text)
7. Teucrium Corn Fund (NYSE:CORN)
5-Year Share Price Performance as of March 29: 32.50%
Teucrium Corn Fund (NYSE:CORN) offers investors a convenient means to access corn futures prices within a brokerage account. With increasing demand for corn driven by global population growth and the expanding middle class, Teucrium Corn Fund (NYSE:CORN) is one of the best agriculture ETFs to consider. The ETF was established on June 9, 2010. Currently, Teucrium Corn Fund (NYSE:CORN)’s net assets amount to nearly $70 million and the fund features an expense ratio of 0.20%.
6. iShares MSCI Agriculture Producers ETF (NYSE:VEGI)
5-Year Share Price Performance as of March 29: 37.55%
iShares MSCI Agriculture Producers ETF (NYSE:VEGI) ranks 6th on our list of the best agriculture ETFs. The fund aims to mirror the performance of the MSCI ACWI Select Agriculture Producers Investable Market Index. The ETF provides exposure to firms engaged in producing fertilizers, agricultural chemicals, farm machinery, as well as packaged foods and meats. iShares MSCI Agriculture Producers ETF (NYSE:VEGI) was launched on January 31, 2012. As of March 28, 2024, the fund’s net assets equal $133.4 million, and its expense ratio stands at 0.39%. Its portfolio comprises 150 stocks.
Nutrien Ltd. (NYSE:NTR) is one of the top holdings of the iShares MSCI Agriculture Producers ETF (NYSE:VEGI). Nutrien Ltd. (NYSE:NTR) is a leading provider of crop inputs and related services. On March 26, Jefferies initiated coverage of Nutrien with a Buy rating, citing potential gains driven by increasing crop prices and rising demand for biofuels. Jefferies set a price target of $62 per share, based on an estimated enterprise value of 7.5 times EBITDA for 2026.
According to Insider Monkey’s fourth quarter database, 39 hedge funds were bullish on Nutrien Ltd. (NYSE:NTR), compared to 33 funds in the last quarter.
In addition to Archer-Daniels-Midland Company (NYSE:ADM), Bunge Global SA (NYSE:BG), and CF Industries Holdings, Inc. (NYSE:CF), hedge funds are piling into Nutrien Ltd. (NYSE:NTR) for exposure to the agriculture industry.
ClearBridge Investments made the following comment about Nutrien Ltd. (NYSE:NTR) in its Q3 2022 investor letter:
“However, we believe this is exactly the kind of environment that separates the highest-quality companies from their peers and allows them to strengthen their competitive positioning. For example, Nutrien Ltd. (NYSE:NTR), a Canadian fertilizer company, was a top contributor during the quarter. While the war in Ukraine and economic sanctions on Russia have significantly reduced the output of two of the world’s largest agricultural producers, Nutrien has benefited from a strong global agricultural cycle and from farmers seeking to increase their output and capitalize on higher agricultural prices.”
Click to continue reading and see 5 Best Agriculture ETFs To Buy.
Suggested articles:
- 25 Things Every Dividend Investor Should Know
- 14 Best Stocks To Buy According to AI
- 15 Most Valuable Alcohol Companies in the World
Disclosure: None. 11 Best Agriculture ETFs To Buy is originally published on Insider Monkey.