Soft Commodity ETFs Suffer A Slaughter

As markets prepare for another four years of Barack Obama, it is safe to say that trading has been anything but smooth. With most benchmarks suffering a poor string of sessions last week, many are looking to the near-term or have focused on exactly what happened last week. But with commodity investing, it is always important to take a look at longer-developing trends, as they can often signal how a particular asset will perform in the near future [for more softs news and analysis subscribe to our free newsletter].

Soft commodities have suffered a rough month, as their trailing four-week returns are among the worst in this asset class. While many have been focused on surging precious metals or lumber’s massive spike, many have overlooked the poor performance from this specific group of commodities. Softs are notoriously frustrating to trade, as they are extremely volatile and can often exhibit hefty movements without warning, and the past four weeks have been no exception.

Below, we outline several ETFs covering the softs world as well as their unfortunate performances in the trailing four-week period.

  • Dow Jones-UBS Sugar Subindex Total Return ETN (SGG): This sugar fund has taken the worst hit, as it has lost more than 8.2% in the last month.
  • Dow Jones-UBS Coffee ETN (JO): One of the most popular softs products out there, JO has slipped more than 5.6% over the last four weeks.
  • Dow Jones-UBS Cocoa Total Return Sub-Index ETN (NIB): Just barely behind coffee, this ETN has surrendered 5.4% over the same time frame.
  • Dow Jones-UBS Cotton Total Return Sub-Index ETN (BAL): Though BAL has not performed as badly as its peers, the ETN is still down nearly 2.7% in the last month.
  • Dow Jones-UBS Softs Total Return Sub-Index ETN (JJS): This ETN tracks the entire softs space, with exposure to all four of the aforementioned commodities. Its four-week performance has yielded losses of more than 7%.

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Disclosure: No positions at time of writing.

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