Chris Johnson

What's the Better Agricultural Play: DBA or MOO?

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I've had my eye on the agriculture sector for some time, especially as the critical growing seasons for grains are under way. In the past, I've found the PowerShares DB Agriculture Fund (DBA) to be an easy way to gain agriculture exposure, as DBA trades futures contracts on corn, wheat, soybeans and sugar.

Lately, though, there's been a catch.

While there's been pricing power on some grains, others, such as wheat, remain in heavy supply. That's put DBA in a tug-of-war between commodity prices, which has taken some of the wind out of my appetite for the shares.

But I'm still hungry for some agriculture exposure. So what's the answer?

Another ETF stands to fill my plate. The Market Vectors Agribusiness ETF (MOO) -- cute ticker -- invests in companies that have exposure to the agricultural sector.

With stocks such as Archer Daniels Midland (ADM), Monsanto Company (MON), Potash (POT) and others, MOO provides less company- or commodity-specific risk, meaning that this ETF's volatility is likely to be spread out a bit more than that of DBA.

Another quality I like is that MOO is less-heavily traded than DBA. I prefer to remain an arm's length from crowded trades whenever possible, mainly because I don't like to "run with the crowd."

With the commodity pits filled with newbie investors, DBA can be thought of as a derivative of a crowded trade. For now, the thought of avoiding this crowd is a positive, as the crowd's knee-jerk reactions on the sell side can be a killer.

Stick with companies over commodities -- and that means MOO over DBA.

Chris Johnson is the co-editor of The Winning Edge trading service designed to help you make options profits around corporate earnings and other market events. For more information about him, read his bio here.