The PowerShares DB Agriculture Fund (NASDAQ: DBA) is an ETF, or a proxy for soft and hard commodities – not the stocks that represent them. The DBA Fund includes weightings of cattle, corn, beans, sugar, coffee, wheat and other grains. The fund was created because trading in the individual names can be tricky; it definitely requires experience and expertise in commodities trading.
Aggregate funds like the DBA are quite useful for analytical purposes, as they provide a broad view of trends and price action for the entire group. Looking at the chart, we can see that it has made higher lows on its way up from the February 2016 bottom. These commodities were helped by stimulative monetary policies around the globe and a drop off in the dollar currency basket.
Crossing the 200 ma in April was a successful push past a big hurdle, and now the moving average has turned up. The MACD is currently on a buy signal, and though relative strength has been impressive, it’s poised for some sideways action as indicated by lower turnover coming off the pennant. After a stalling briefly and holding the recent lows, we should see DBA start moving higher again, perhaps toward the 30 level later on this year.
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About DBA Fund
The investment seeks to track the price and yield performance, before fees and expenses, of the Deutsche Bank Liquid Commodity Index – Optimum Yield Agriculture Excess Return. The index is a rules-based index composed of futures contracts on some of the most liquid and widely traded agricultural commodities – corn, wheat, soy beans and sugar. The index is intended to reflect the performance of the agricultural sector.