Tag: JO

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.

Coffee May Make You and Your Portfolio Healthier

by Fred Fuld III

If you drink coffee first thing in the morning, you may be doing something healthy for your body without even realizing it. Not only does coffee have energy-boosting properties, but according to a recent study published in Hepatology Magazine, coffee may reduce the risk of dying of liver cirrhosis by as much as 66%..

Another study, reported in the Journal of the International Society of Sports Nutrition, showed that consuming coffee before exercise may burn more fat.

Other studies have shown that coffee may reduce the risk of heart disease, according to the American Heart Association. It has even shown to reduce depression.

If you are looking for a way to invest in coffee, there is a way to invest in the price of coffee directly. The price of the iPath Series B Bloomberg Coffee Subindex Total Return ETN (JO) has increased by 1.19% year to date. This tracks futures contracts on the commodity of coffee and allows investors to gain exposure to coffee prices without worrying about direct exposure to futures.

Starbucks (SBUX) is the Seattle, Washington based company with approximately 32,000 stores around the world that sell coffee, tea, blended drinks, sandwiches, pastries, and many other food and drink items. Starbucks has a large market cap of over $139 billion and pays a dividend yield of 1.52%, which has increased every year since 2010. The company has also increased its revenue each fiscal year since 2009. The stock has an extremely high  price to earnings  ratio of 208, and a forward PE ratio of 41.

Coffee Holding (JVA) is a wholesale coffee roaster and dealer that manufactures, roasts, packages, markets, and distributes roasted and blended coffee for private labeled accounts and its own brands, with three product categories: wholesale green coffee, branded coffee, and private label coffee. With small market cap of $28 million, the company’s stock is very speculative. The stock  trades at 23 times trailing earnings.

Luckin Coffee (LKNCY) is the China based company that is a retailer of freshly brewed coffee and other drinks and food. The company has over 2,300 stores. It has a market cap of $2.3 billion. The stock has a price/sales ratio of 4.

Another option is Farmer Brothers Company (FARM), a coffee foodservice company that manufactures, wholesales, and distributes coffee, tea, and hundreds of other foodservice items to retailers and foodservice providers. Its customers include hotels, offices, restaurants, convenience stores, and other establishments. The company has a market cap of $182 million, and is currently generating negative earnings.

Spot Coffee (Canada) Ltd. (SCFFF) has an extremely low market cap of just $4 million. It is a Canada-based company that designs, builds, and operates coffee cafés throughout Canada and the United States. The stock is generating negative earnings.

Youngevity International (YGYI), which has a low market cap of only $9.5 million, is a company that develops and distributes nutritional products and commercial coffee. The company’s earnings are negative.

Baristas Coffee (BCCI) is a drive-through retailer of coffee. This penny stock has a market cap of less than $1 million.

Most of the above mentioned stocks are extremely lop cap companies and should be considered extremely speculative. If you are a drinker of coffee, maybe you should put your money where your mouth is and consider investing in some coffee stocks.

Disclosure: Author didn’t own any of the above at the time the article was written.

Drink Coffee, Live Longer, Make Money with Coffee Stocks

Great news for you coffee drinkers. About a week ago, the news came out that drinking coffee can extend your life expectancy. And it wasn’t just one study that released this information, there were two studies.

One study, funded by the European Commission Directorate-General for Health and Consumers and International Agency for Research on Cancer was the largest research on coffee ever, involving half a million subjects from ten European countries. The study found that there was reduced risk of death from various causes, due to drinking coffee.

The other study involved multiethnic participants, including African Americans, Native Hawaiians, Japanese Americans, Latinos, and whites. This study, funded by the National Cancer Institute, found that coffee drinking was associated with a reduced risk for death in African Americans, Japanese Americans, Latinos, and whites.

If the desire for a longer life through coffee consumption catches on, this could certainly benefit the coffee companies. It is interesting to note that since these studies were released on July 11, the price of the iPath® Bloomberg Coffee Subindex Total Return ETN (JO) has increased by over 8%. JO consists of one futures contract on the commodity of coffee, and it is a way for investors to participate in the price of coffee without investing in the futures market.

Of course, Starbucks (SBUX) is the big elephant in the coffee cup with a market cap of $84 billion. The stock trades at 23.8 times forward earnings, and pays a dividend yield of 1.63%. Dividends have increased every year for the last seven years. Earnings for the latest quarter jumped 13.5% year-over-year.

If you are looking for a coffee producer and distributor, there is Coffee Holding (JVA), which is a very low cap stock at $25 million, and therefore very speculative. The stock trades at 20.8 times trailing earnings and has a very favorable price to sales ratio of 0.36.

If you are looking for a list of publicly traded coffee companies, look no further than the free list of coffee, caffeine, and tea stocks HERE. Hopefully one of these stocks can stimulate your portfolio and keep it healthy.

Disclosure: Author didn’t own any of the above stocks at the time the article was written.