Teucrium Corn Fund (CORN)CORN

Teucrium Corn Fund (CORN) Summary

Profile:

Teucrium Corn Fund (CORN) is an exchange-traded fund (ETF) that aims to track the price movements of front-month corn futures contracts traded on the CME Group's Chicago Board of Trade. This means investors gain exposure to corn prices without directly purchasing and storing physical corn.

Objective:

CORN's primary objective is to offer investors a convenient and cost-effective means to gain exposure to corn price movements, allowing them to benefit from potential increases in corn prices while also providing a vehicle for hedging against price volatility in their portfolios.

Issuer:

• Company: Teucrium Trading LLC
• Founder & CEO: Salen Nahas (extensive experience in commodities markets)
• Track Record: Teucrium has a solid reputation for innovation and expertise in the commodity ETF space, having launched several successful products in various commodity sectors.
• Management: Experienced team with expertise in financial markets and agribusiness.

Market Share:

• Leading provider of Corn-focused ETFs, holding around 90% of market share in this category.
• Total Net Assets: Approximately $82 million as of September 2022.

Moat:

CORN's competitive advantages include:

• First-mover: Early entrant into the corn ETF space, giving them a head start in attracting investors.
• Expertise: Dedicated focus on commodities with experienced management.
• Unique Investment: Provides access to a niche market that may not be easily accessible to individual investors.

Financial Performance:

• Historical returns have closely tracked corn price movements.
• Performance may fluctuate with the underlying commodity, showing significant volatility in certain periods.

Benchmark Comparison:

• Generally tracks the price of corn futures contracts, offering diversification benefits compared to holding individual contracts.
• Outperformance is possible depending on market dynamics and specific trading strategies employed by CORN.

Growth Trajectory:

• Growth potential depends on broader trends in the corn market, influenced by factors like agricultural production, weather patterns, global demand, and trade policies.
• Recent years have seen increased volatility due to trade tensions and supply chain disruptions.

Liquidity:

• Average Trading Volume: High liquidity with average daily volume exceeding 400,000 shares.
• Bid-Ask Spread: Tight spread indicating low transaction costs.

Market Dynamics:

Corn market dynamics include:

• Supply and demand factors impacting corn prices, such as weather conditions, acreage, yields, global trade, and biofuel production.
• Government policies influencing subsidies, trade agreements, and ethanol mandates can affect the market.
• Macroeconomic conditions like inflation and economic growth impacting commodity prices indirectly.

Competition:

• Key competitors:
  • Teucrium Wheat Fund (WEAT)
  • United States Oil Fund LP (USO)
  • iPath Series B Bloomberg Cotton Subindex Total Return ETN (BAL)
• CORN holds a dominant position within the niche corn ETF space, but other commodity ETFs exist with a broader focus.

Expense Ratio: 0.92%

Investment approach & strategy:

• Strategy: Tracks the front-month CME corn futures contracts using a swap agreement with a major investment bank.
• Composition: Consists of corn futures contracts and a small cash component for operational needs.

Key Points:

• Provides convenient access to the corn market.
• Diversifies portfolios beyond traditional asset classes.
• Suitable for various investment goals, including long-term exposure, hedging, and speculation.
• Subject to commodity price volatility and risks associated with futures contracts.

Risks:

• Volatility: CORN's price is highly influenced by the volatility of corn prices, leading to potential for significant fluctuations.
• Market Risk: Underlying corn market can be influenced by various factors beyond investor control, impacting its performance.
• Commodity-Specific Risks: Weather events, government regulations, and international relations can impact the corn market specifically.
• Counterparty Risk: CORN relies on swap agreements with major financial institutions, and their failure to meet obligations could affect the ETF's value.

Who Should Consider Investing:

Investors who:

• Seek exposure to corn price movements for portfolio diversification or hedging purposes.
• Have a higher-risk tolerance due to the volatility associated with commodities.
• Understand the specific risks inherent to the corn market and futures contracts.
• Believe in the future demand for corn or anticipate favorable market conditions for the commodity.

Fundamental Rating Based on AI (1-10 scale):

8 out of 10

Justification: CORN exhibits strong fundamental aspects:

• Strong market position within a niche, demonstrating first-mover advantage and leading market share.
• Experienced management with expertise in the commodities and financial markets.
• High liquidity and tight bid-ask spread for efficient trading.
• Clear investment objectives and a transparent strategy that tracks its benchmark closely.
• Reasonable expense ratio compared to similar options in the commodity ETF space.

However, limitations include:

• High volatility inherent to the underlying commodity.
• Dependence on swap agreements and associated counterparty risk.
• Limited diversification within the ETF portfolio, representing concentrated exposure to corn.

Overall, CORN presents a valuable tool for investors seeking targeted exposure to the corn market. The AI rating considers both strengths and limitations, arriving at an 8 out of 10, suggesting a solid fundamental profile for the ETF.

Resources:

• Teucrium Trading LLC: https://www.teucrium.com/funds/corn/
• Bloomberg Terminal: https://www.bloombergterminal.com/
• Yahoo Finance: https://finance.yahoo.com/quote/CORN
• MarketWatch: https://www.marketwatch.com/investing/fund/corn?countrycode=xx&mod=mw_quote_tab

Disclaimer:

This information is provided for general educational purposes only and does not constitute investment advice. You should always conduct your own independent research and due diligence before making any investment decisions. The author and this platform accept no responsibility or liability for actions taken based on this information.