Invesco DB Agriculture Fund (DBA, NYSE)

On March 12, we added a position in the Invesco DB Agriculture Fund and featured it as a Chart of the Week, which is included below. Today, we are updating that chart.

DBA tracks the DBIQ Diversified Agriculture Index which is a rules-based index composed of futures contracts on some of the most liquid and widely traded agricultural commodities. The Index is intended to reflect the performance of the agricultural sector.

In this update, I included some of the comments made in the October 16, 2020 interview, mentioned in the March 12 edition. Grant Williams and Felix Zulauf discuss “the end game”, or the likely effects of the current epoch of increasing gov’t debt, and gov’t and central bank intervention in the financial system. In a word, Zulauf’s expectation, as is mine, is inflation.


Here is an excerpt from that conversation:

“So I think you should stay with large cap equities with some of the commodities.

Actually, I think commodities will probably be the least affected by the interventions because they are not really system relevant. If equities go down by 50%, it may break the system, if commodities go down 50%, that’s not the case. Therefore I think commodities are probably the safer bet if you have a firm view of where the commodity should move to. I’m quite constructive on agricultural commodities.

The commodity sector has been out of favour for virtually 10 years and I think it’s bottoming on a secular basis. Not because I think we will have dramatic demand in the next few years, but I think there are problems with supply and it’s probably an asset class that seems, from a regulatory standpoint and from a systemic standpoint, less affected than other assets and therefore capital could feel safer moving into those commodities like the food part. I like the food part a lot because I think the climate will turn cooler and not warm and that is not very good for harvest results, et cetera. The world population is still growing, but it’s not growing by much, and therefore there is a steady growth of demand for food and therefore I see higher prices. So the next five years, I think food commodities could be fantastic.”


I think he is correct, but more importantly, the trends in agricultural commodities support that proposition.

After investing some of our money into DBA at 17.30, the fund quickly declined to 16.60. However, by moving equally quickly back above 17.00, DBA has formed a Flag pattern, typical of a consolidation in an uptrend.

  • A flag pattern, in technical analysis, is a price chart characterized by a sharp countertrend (the flag) succeeding a previous uptrend, typically at a 45 degree angle – (the flag pole).
  • Flag patterns are accompanied by representative volume indicators as well as price action.
  • Flag patterns signify trend reversals or breakouts after a period of consolidation.

Confirming to a classic Flag pattern, volume rose into the peak, and declined into the Flag. Overnight, the Ag commodities held in DBA, like Cocoa, Corn, Coffee, Cotton, Sugar, Wheat and Soybeans were up in price, some strongly. It remains to be seen of course, but if DBA conforms to the pattern, rising volume could move it out of the Flag, toward the next target at $21.00.







Share on linkedin
Share on facebook
Share on twitter
Share on print
Share on email

Recent Posts

The opinions contained herein are the opinions of the author and readers should not assume they reflect the opinions or recommendations of Wellington-Altus Private Wealth. Assumptions, opinions and information constitute the author’s judgement as of the date this material and subject to change without notice. We do not warrant the completeness or accuracy of this material, and it should not be relied upon as such. Before acting on any recommendation, you should consider whether it is suitable for your particular circumstances and, if necessary, seek professional advice. Graphs and charts are used for illustrative purposes only and do not reflect future values or future performance of any investment. The information does not provide financial, legal, tax or investment advice. Particular investment, tax, or trading strategies should be evaluated relative to each individual’s objectives and risk tolerance. All third party products and services referred to or advertised in this presentation are sold by the company or organization named. While these products or services may serve as valuable aids to the independent investor, WAPW does not specifically endorse any of these products or services. The third party products and services referred to, or advertised in this presentation, are available as a convenience to its customers only, and WAPW is not liable for any claims, losses or damages however arising out of any purchase or use of third party products or services. All insurance products and services are offered by life licensed advisors of Wellington-Altus. Wellington-Altus Private Wealth Inc. is a member of the Canadian Investor Protection Fund and the Investment Industry Regulatory Organization of Canada. All trademarks are the property of their respective owners.