Stocks continue to slide as investors are trying to figure out the economic implications of Russian aggression against Ukraine. Today, Ukraine declared a state of emergency and began to mobilize its reservists.
Yesterday, President Biden announced an initial round of sanctions and EU, the U.K., Canada, Australia, and Japan also announced their sanctions and restrictions. These could cause shortages of food and energy.
Russia is among the world’s largest suppliers of oil and natural gas. Both countries are major exporters of wheat, corn, edible oils and metals like aluminium, nickel, and palladium.
We have already seen a surge in prices of crude, natural gas, grains and metals. Russia is also one of the world’s largest exporters of fertilizers. Any supply disruptions would result in higher food inflation. Food prices are already at their highest levels in a decade.
ETF areas like gold, other commodities, and agribusiness could benefit from the crisis. The iShares Gold Trust Micro (IAUM), the cheapest physically-backed gold ETF, is worth a look.
The Invesco Optimum Yield Diversified Commodity Strategy No K-1 ETF (PDBC) is the most popular broad-based commodity ETF, which invests in futures on 14 heavily traded commodities
The VanEck Agribusiness ETF (MOO) invests in companies that derive more than 50% of their revenues from agribusiness. Deere & Company (DE), Zoetis (ZTS) and Nutrien (NTR) are its top holdings.