1 reply to this topic

[Jnavin]

why we've seen huge, massive upmoves in wheat and corn -- and yet the DBA etf has only moved from 25 to 28 or so?

This doesn't quite make sense. What am I missing?

[SilentOne]

hi john,

I've noted the same thing for a while. In fact another glaring example is USO. WTIC hits all time highs and USO is in no way matching performance in terms of relative price.



I assume it has to do with the cost of futures (rolling over contracts etc.) and fees that institutions charge to run these things. It is something I had not considered when I began playing some of these commodity ETFs. Just the same, as I do not play futures, it does provide me the opportunity to play commodities directly. I think the best commodity ETFs are those that hold the physical itself like SLV and GLD. There is much less leakage. I expect to get around this problem we will soon see issuance of geared commodity ETFs.

Regarding DBA, I am out of the ETF now as I am looking for a top in corn and wheat, possibly even soyabeans. Grains will be entering a bear mode at some point soon and a top between now and the start of October is highly likely. In fact the top may already be in for wheat and corn.

Here are some wheat charts I did for a friend a few days ago. Note the late Sept. reversal the last 2 years.








cheers,

john

Edited by SilentOne, 19 September 2007 - 04:26 AM.