A confluence of weather, geopolitical factors, and of course inflation are creating a perfect storm of volatility for commodities. With July underway, corn and soybean prices could see more volatility ahead.
“The month of July is one that can bring both angst and excitement to grain markets,” wrote U.S. Department of Agriculture reports, crop progress ratings and ever-changing weather forecasts bring price volatility to the corn and soybean commodity complex.”
While commodities as a whole have taken a breather as one of the best-performing assets amid inflation, prices are still relatively high. With recession pressures weighing down the capital markets, high prices for goods can only exacerbate economic growth.
“Bottomline, most would agree that prices are still historically high,” Blohm added. “With high prices comes high volatility, and many feel that we can likely see extreme unpredictable corn and soybean price movement during the month of July.”
2 Ways to Play Corn and Soybean Prices
With volatility ahead, there are a couple of ways to get strategic exposure to rising corn and soybean prices via exchange traded funds (ETFs) that track these commodities.
For corn, consider the Teucrium Corn Fund (CORN), which tracks three futures contracts for corn that are traded on the Chicago Board of Trade, including 35% second to expire contracts, 30% third to expire contracts, and 35% December following the third to expire. The various contract exposures help the fund limit the negative effects of rolling contracts, especially during a market in contango.
Next, there’s the Teucrium Soybean Fund (SOYB). SOYB can offer similar exposure to what investors could obtain by trading in soybean futures contracts themselves.
For investors looking at ways to mute the impact of inflation, commodities may also be beneficial for inflationary periods, according to experts, making them a valuable hedge against the recent surge in the prices of goods and services over the past year.
For more news, information, and strategy, visit the Commodities Channel.