How do you invest in wheat grain commodities?


Quick Answer

Invest in wheat grain commodities using wheat futures contracts, individual wheat stocks or wheat exchange-traded funds, or ETFs. Eric Dutram from Commodity HQ expects demand from emerging markets could drive the price of wheat higher, making it an intriguing investment choice.

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Full Answer

Wheat futures are traded on the Kansas City Board Of Trade and the Chicago Board of Trade, according to Dutram. At both exchanges, a wheat futures contract consists of 5,000 bushels of hard red winter wheat, which accounts for around 45 percent of total U.S. wheat production and wheat exports.

While there are no pure-play wheat producer stocks, Dutram recommends a couple of stocks related to global agribusiness. Bunge Limited (BG) and Archer Daniels Midland (ADM) profit from the production and sale of agricultural commodities. Mosaic (MOS) and Potash Corporation of Saskatchewan (POT) manufacture fertilizer, which improves harvest yields.

Perhaps the easiest way for an investor to gain exposure to wheat prices is via an ETF. The Teucrium Wheat Fund (WEAT) provides investors unleveraged direct exposure to wheat futures. Dutram also recommends the iPath DJ-UBS Grains TR Sub-index ETN (JJG) or ELEMENTS MLCX Grains Index TR ETN (GRU), although they are not pure-plays on wheat. These are exchange-traded notes similar to the ETF structure.

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