DBA ETF

The soft commodities sector led gains in 2023 and 2024, with significant increases in cocoa, FCOJ, and arabica coffee futures. The Invesco DB Agriculture Fund ETF (DBA) has over 41% exposure to soft commodities, making it a top performer. Coffee and cocoa prices hit record highs in 2024 due to supply concerns, driving DBA's bullish trend.

Grain and oilseed prices have declined, while soft commodities like coffee, sugar, cocoa, and orange juice have surged to multi-year or all-time highs. The USDA's November WASDE report indicates adequate grain supplies, but highlights increased global usage of wheat and coarse grains, supporting current price levels. Invesco DB Agriculture Fund ETF offers diversified exposure to agricultural commodities, benefiting from bullish trends in softs and meats despite bearish grain markets.

'Fast Money' trader Katie Stockton talks investing in agriculture, trading on volatility and more.

The Invesco DB Agriculture Fund ETF holds futures contracts of agricultural commodities, with a large weight in cocoa. The DBA fund is currently attractive due to long-term structural changes driven by climate change and the potential for inflation. Cocoa prices have surged, helped by the spread of Swollen Shoot disease, supply likely to be curtailed further.

Investors have been navigating a complex financial landscape marked by persistent inflation and geopolitical uncertainties. Amid this backdrop, commodity stocks to buy remain a focal point.

Cocoa prices surged significantly, rising fourfold, before undergoing a recent decline. Price volatility has been exacerbated by supply problems and limited market liquidity. There is continued strong global demand for cocoa, as grindings have risen in all regions. While Latin American cocoa producers may boost output, it will not be sufficient to address the severe supply shortages in West Africa in the short term.

Investors looking for momentum may be interested in keeping an eye on Invesco DB Agriculture ETF DBA, as the fund recently reached a 52-week high and has increased by 24.7% from its low of $20.34/share.

Not the first time I have given readers this list of leading indicators to watch for a potential rise in inflation: Last week we focused on sugar. For the weekend, we focused on silver.

The increasing global population supports demand for agricultural commodities. Increasing demand for biofuels supports grain and sugar prices. Inflation has increased production costs, putting upside pressure on agricultural commodity prices.