Tag: commodities

How to Trade Agricultural Commodities without Trading Futures

by Fred Fuld III

Have you ever thought about trading or investing in an agricultural commodity, possibly as an inflation hedge, such as  wheat, corn, soybeans, or even coffee?

But maybe you didn’t want to get into futures because of the risk or lack of understanding or both.

Well, there is another way to trade these food items, and that is through the agricultural commodities exchange traded funds.

Probably the safest way is through an ETF that has a diversified portfolio of agricultural products, such as the Invesco DB Agriculture Fund (DBA), which has an investment objective of investing in a portfolio of exchange-traded agricultural futures.

If you think the price of corn is going to take off, you could trade the Teucrium Corn Fund (CORN).

Or maybe you think the demand for sugar is going to increase, causing the sugar price to spike. You have a couple of alternatives, the iPath Series B Bloomberg Sugar Subindex Total Return ETN (SGG) and the Teucrium Sugar Fund (CANE).

If you like chocolate, there is the iPath Bloomberg Cocoa Subindex Total Return ETN (NIB).

The following is a list of the agricultural commodities ETFs.

Commodity Symbol ETF Name  Total Assets*
Agriculture DBA Invesco DB Agriculture Fund  1,018,170
Agriculture RJA Elements Rogers International Commodity Index-Agriculture Total Return ETN  153,758
Corn CORN Teucrium Corn Fund  120,848
Coffee JO iPath Series B Bloomberg Coffee Subindex Total Return ETN  94,895
Wheat WEAT Teucrium Wheat Fund  75,645
Soybean SOYB Teucrium Soybean Fund  44,971
Sugar SGG iPath Series B Bloomberg Sugar Subindex Total Return ETN  26,419
Sugar CANE Teucrium Sugar Fund  22,844
Cocoa NIB iPath Bloomberg Cocoa Subindex Total Return ETN  22,713
Grains JJG iPath Series B Bloomberg Grains Subindex Total Return ETN  21,563
Cotton BAL iPath Series B Bloomberg Cotton Subindex Total Return ETN  20,602
Livestock COW iPath Series B Bloomberg Livestock Subindex Total Return ETN  19,665
Agriculture TAGS Teucrium Agricultural Fund  14,180
Agriculture JJA iPath Series B Bloomberg Agriculture Subindex Total Return ETN  11,211
* In thousands

You will notice that some of these are ETNs (Exchange Traded Notes) as opposed to ETFs. ETNs are senior, unsecured debt securities similar to a bond

Keep in mind that these funds are very volatile, very speculative, and can have low volume and very wide spreads.

 

Disclosure: Author is long JO and WEAT.

CFTC Announces Its Largest Ever Whistleblower Award of Approximately $30 Million

Washington, DC – The Commodity Futures Trading Commission (CFTC) today announced an award of approximately $30 million to a whistleblower who voluntarily provided key original information that led to a successful enforcement action.  The award is the largest award made by the CFTC’s Whistleblower Program to date and is the fifth award made by the program.

“The Whistleblower Program has become an integral component in the agency’s enforcement arsenal,” said CFTC Chairman, J. Christopher Giancarlo.  “We hope that an award of this magnitude will incentivize whistleblowers to come forward with valuable information and provide notice to market participants that individuals are reporting quality information about violations of the Commodity Exchange Act [CEA].”

James McDonald, Director of the Division of Enforcement, stated: “Whistleblower submissions have become a significant part of our enforcement program, allowing us to pursue violations we might otherwise have been unable to detect.  That’s one reason why we’ve worked hard to expand our Whistleblower Program, including by increasing the protections afforded to whistleblowers that come forward.  I expect the Whistleblower Program to contribute even more substantially to our enforcement efforts going forward.”

The CFTC’s Whistleblower Program was created by section 748 of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (Dodd-Frank Act).  The CFTC pays monetary awards to eligible whistleblowers who voluntarily provide the CFTC with original information on violations of the CEA that leads the CFTC to bring a successful enforcement action resulting in monetary sanctions exceeding $1,000,000.  By law, the CFTC protects the confidentiality of whistleblowers and does not disclose information that might directly or indirectly reveal a whistleblower’s identity.  Under the Dodd-Frank Act, employers may not retaliate against whistleblowers for reporting possible violations of the CEA to the CFTC.

Whistleblowers are eligible to receive between 10 percent and 30 percent of the monetary sanctions collected.  All whistleblower awards are paid from the CFTC Customer Protection Fund established by Congress and financed entirely through monetary sanctions paid to the CFTC by violators of the CEA.  No money is taken or withheld from harmed investors to fund the program.

Previously, the highest award amount paid to a CFTC whistleblower was in March 2016 of more than $10 million (see CFTC Press Release 7351-16, CFTC Announces Whistleblower Award of More Than $10 Million).

“The award today is a demonstration of the program’s commitment to reward those who provide quality information to the CFTC,” said Christopher Ehrman, Director of the CFTC’s Whistleblower Office.  “The number of leads the office receives continues to grow each year by the hundreds.  We hope that this award will continue to facilitate the upward momentum and success of the CFTC’s Whistleblower Program by attracting those with knowledge of wrongdoing to come forward.”

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To learn more about the CFTC’s Whistleblower Program and to find out how to provide a tip or apply for an award, please visit the program’s website at https://www.whistleblower.gov/.