Russia opened the door this week to possible price hikes in the future for wheat and corn after it said it could introduce a new cap on grain exports.
This could benefit investors in ETFs such as the Teucrium Corn Fund (CORN, quote) and the Teucrium Wheat Fund (WEAT, quote).
The government may draw up an order to restrict grain exports if foreign sales threaten to cause domestic shortages, said Viktor Zubkov, Russia’s first deputy prime minister. This comes just three months after the country lifted an earlier export ban that followed last year’s drought and fires in the country’s grain belt.
Grain exports have surged from Russia to 11 million tons since July when the government lifted the 11-month ban. Exports are expected to reach approximately 18 million tons by the end of December.
Zubkov said that Russia could “afford” to export about 23 million to 24 million tons of grain in the 2011/12 marketing year, which started in July.
This statement has led to optimism among traders and analysts about supplies. They believe that the cap suggested by Mr. Zubkov is unlikely to have as dramatic an effect as last year’s ban on all grain exports which sent grain prices soaring.
CORN and WEAT will benefit if the underlying grain prices rise. However, if investors agree with the analysts and are bearish on grain and agriculture prices, there is also an alternative. It is the DB Agriculture Short ETN (ADZ, quote).