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Summary Depressed commodity prices are hurting farmers. As farmers’ profits fall, the agribusiness industry could slow. Overview of current agriculture industry. Agribusiness exchange-traded funds could experience stunted growth as depressed grain prices squeeze farmers’ profit margins. Over the past year, the Market Vectors Agribusiness ETF (NYSEARCA: MOO ) rose 7.7% and the PowerShares Global Agriculture Portfolio ETF (NASDAQ: PAGG ) increased 7.6% higher. “U.S. farmers are beginning to cut back on farming equipment as the low crop prices and rising costs diminish income,” reports Alan Bjerga for Bloomberg . The U.S. government projects that farm income this year is heading toward the third consecutive decline and will post its largest fall since the Great Depression. Net-cash income from farm activity is expected to plunge 22% to $89.4 billion, the biggest drop off since 1932. For instance, Illinois grower Jason Lay stated that he will purchase 30% less fertilizer for 2,500 acres of corn and soybeans, 7% fewer seeds for spring planting and no new equipment, with crop futures now trading near a five-year low. “You spend when times are prosperous so you don’t need to when they’re not,” Lay said in the Bloomberg article. “That’s how you make it through.” Over the past year, the Teucrium Corn ETF (NYSEARCA: CORN ) has declined 17.0% and the Teucrium Soybean Fund (NYSEARCA: SOYB ) fell 14.1%. “The U.S. Department of Agriculture has predicted lower-than-expected U.S. corn stockpiles next year of 1.827 billion bushels, down from 1.877 billion, but raised its global stockpile projections to 189.6 million metric tons from 189.2 million,” reports Jesse Newman for the Wall Street Journal . “Combined grain supplies are substantial, and the market will not shift attention to the spring-planting progress and crop development across the Northern Hemisphere,” Jerry Gidel, the chief feed-grain analyst at Rice Dairy LLC, said in a Bloomberg article. Market Vectors Agribusiness (click to enlarge) Max Chen contributed to this article . Disclosure: The author has no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. (More…) The author wrote this article themselves, and it expresses their own opinions. The author is not receiving compensation for it. The author has no business relationship with any company whose stock is mentioned in this article. Scalper1 News
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