One factor offering comfort to stay long agricultural commodities is that in general, food inflation remains high, and expected crops in many grains and soft commodities including corn, sunflower seeds, orange juice and cocoa remain subdued. In the wake of close monitoring of the Black Sea grain initiative, which has been essentially associated only with wheat price outlook, many other grains and softs were ill-forgotten as if fundamental factors ceased to exist.

So far, CME speculators have not bought into the thesis. According to data compiled by Saxo Bank recently, speculators were net short the six major crops – including corn, soybeans, soybean meal and soybean oil – as recently as June 13th, the date of the most recent Commitment of Traders ("COT") report.

Understandably, investors became reluctant to keep chasing the WEAT ETF, as it has rallied close to 20% since in early May. Instead, prudent investors should consider the Invesco DB Agriculture Fund (DBA), an exchange-traded fund that takes a portfolio approach to investing in agricultural commodities. The DBA Fund tracks the DBIQ Diversified Agriculture Index, which comprises liquid futures contracts on agricultural commodities.

Importantly, DBA funds do not invest directly in underlying commodities. Instead, the fund invests in futures on various commodities. As the futures in the DBA portfolio are about to expire, the fund needs to switch to a futures contract with a later expiration date.

When commodities are in contango, expiring futures contracts often trade at a discount to forward futures contracts, causing the DBA Foundation to lose value with each contract “rolled over.” This “rolling decay” is a common problem with futures-based mutual funds, and is why I don't recommend futures-based funds as long-term portfolio holdings.

The DBA Fund has assets under management of $880 million and an expense ratio of 0.91%.