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Hogs, coffee and orange juice to feature in ‘breakfast’ ETF

(Bloomberg) — The first meal of the day could soon be served to investors through ETFs.

According to a Wednesday filing with the Securities and Exchange Commission, the Direxion Breakfast Commodities Strategy exchange-traded fund will track an index focused on coffee, orange juice, wheat and lean-hog futures.

Agricultural commodity prices rose over the past year as supply-chain disruptions kept inventories low and government stimulus dampened demand. Extreme weather, with a historic drought in coffee-producing Brazil and the worst frost in decades, also added to price pressures.

The Bloomberg Coffee subindex has jumped 77% over the past year, while Bloomberg’s lean-hog index is up 33% and Bloomberg’s Kansas Wheat subindex is up 14%. Price gains have marked a major win for commodity futures ETFs, which have generated nearly $10 billion in the past year, according to Bloomberg Intelligence ETF analyst Eric Balchunas.

“Commodity ETFs are doing something for a moment because of inflation,” Balchunas said. Direxion also filed for five additional funds that will focus on coffee, timber, copper, corn and soybeans, respectively, but the Breakfast ETF packages several unique futures into one fund.

READ: Global food prices face upward pressure as oil rally continues

Read: Doomed Brazil Harvest Drives Food Inflation Everywhere

Balchunas said the Breakfast ETF, if approved, could be the only fund tracking orange juice futures. Futures for one of the most popular breakfast beverages have hit their highest level since 2018 amid a decline in production of Florida oranges.

“Given that these are very specific and focused baskets of somewhat obscure items, they have decent ‘pop’ potential,” Balchunas said. “Throw in the fact that they’re like putting on a friendly thematic face that is otherwise known as some legacy techno sounding commodity names. It’s possible that this could get an audience, regardless of how it sounds right now. “

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