Investors Flee the Biggest Ag ETF and Signs Point to Even More Pain Ahead

(Bloomberg) -- The largest exchange-traded fund tracking agriculture has been in the spotlight lately as investors concerned about tariffs pull their bets, and two technical indicators suggest there’s no respite in sight.

The Invesco AB Agriculture Fund, or DBA, has fallen more than 9 percent since the beginning of June -- to an all-time low -- amid concern about tariffs on crops like soybeans and corn, both of which the ETF holds. The Directional Movement Index, or DMI, paints a bleak picture for the fund.

DMI shows the direction of a price trend by charting the divergence between positive and negative levels. The agriculture ETF is showing the longest and strongest selling trend since August 2017. The strength of this move is suggested by the Average Directional Index, a gauge that has far surpassed the key mark of 25.

And as technical indicators -- on top of a burgeoning trade war -- point to a gloomy outlook for the industry, there’s more bad news in the air: U.S. growing weather this year has been excellent for grain crops, providing for ample supply and further driving down prices.

The Bloomberg Agriculture Subindex fell to a record low today, sitting at 42.8. DBA traded at $17.33 as of 12:47 p.m. in New York Wednesday. Investors have pulled $3.5 million out of the fund in the past week and $85 million so far this year.

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