10-Q: Teucrium Commodity Trust Reports Q2 2025 Results

Teucrium Commodity Trust reports a significant reduction in net losses for the first half of 2025, despite a decrease in overall net assets and mixed performance across its individual commodity funds.

Summary

• Teucrium Commodity Trust's combined net assets decreased to $198,950,468 as of June 30, 2025, from $224,647,418 at December 31, 2024.
• The Trust reported a net loss of $(11,963,550) for the six months ended June 30, 2025, a substantial improvement from a net loss of $(34,436,573) for the same period in 2024.
• Cash and cash equivalents for the combined Trust stood at $190,064,814 as of June 30, 2025, down from $210,940,353 at December 31, 2024.
• The Teucrium Corn Fund (CORN) experienced a net loss of $(2,784,542) and a total return of -5.69% for the six months ended June 30, 2025, an improvement from a $(11,833,852) loss and -15.34% return in 2024.
• The Teucrium Soybean Fund (SOYB) turned profitable with a net income of $324,465 and a positive total return of 1.40% for the six months ended June 30, 2025, compared to a $(3,675,445) loss and -12.47% return in 2024.
• The Teucrium Sugar Fund (CANE) reported a net loss of $(182,343) and a total return of -4.25% for the six months ended June 30, 2025, a decline from a $46,720 net income and -2.07% return in 2024.
• The Teucrium Wheat Fund (WEAT) recorded a net loss of $(9,315,907) and a total return of -7.76% for the six months ended June 30, 2025, an improvement from a $(19,004,422) loss and -11.50% return in 2024.
• The Teucrium Agricultural Fund (TAGS) had a net loss of $(361,663) and a total return of -3.84% for the six months ended June 30, 2025, an improvement from a $(1,671,939) loss and -10.07% return in 2024.
• Interest income for all funds decreased year-over-year due to lower average net assets and declining interest rates.
• Management fees paid to the Sponsor decreased across all funds due to lower average net assets.

Sentiment

Score: 4

Explanation: While the Trust significantly reduced its net losses compared to the prior year, overall net assets declined, and most individual funds experienced decreases in NAV per share. The Sugar Fund's performance worsened, and expense ratios generally increased. The market outlook remains volatile with tight supply-demand balances and geopolitical risks.

Positives

• The combined Trust and most individual funds (CORN, WEAT, TAGS) significantly reduced their net losses for the six months ended June 30, 2025, compared to the prior year.
• The Teucrium Soybean Fund (SOYB) successfully transitioned from a net loss to a net income of $324,465 and achieved a positive total return of 1.40% for the first half of 2025.
• Redemption of shares for the combined Trust, SOYB, WEAT, and TAGS was lower in the first half of 2025 compared to the same period in 2024, indicating reduced investor outflows for these funds.
• The Sponsor continues to waive certain expenses for the Teucrium Agricultural Fund (TAGS), contributing to a lower net expense ratio for that fund.
• A settlement agreement resolving multiple legal claims involving Teucrium Trading and its principals became effective on May 10, 2024, removing ongoing litigation uncertainty.

Negatives

• Combined Trust net assets decreased by $25,696,950, or 11.4%, from December 31, 2024, to June 30, 2025.
• Most individual funds (CORN, CANE, WEAT, TAGS) experienced decreases in total net assets and Net Asset Value (NAV) per share year-over-year.
• The Teucrium Sugar Fund (CANE) shifted from a net income in 2024 to a net loss of $(182,343) in 2025, and its total return worsened.
• The Teucrium Corn Fund (CORN) and Teucrium Sugar Fund (CANE) experienced higher redemptions of shares compared to the prior year period.
• Interest income declined across all funds due to a combination of lower average net assets and declining interest rates.
• Total expense ratios for most funds increased due to lower average net assets, as many operational expenses are fixed or contract-based.
• Commodity prices generally depreciated, negatively impacting fund performance, particularly for corn and wheat.
• Global corn, soybean, and wheat consumption is projected to be slightly higher than production for 2025-26, indicating a tight supply-demand balance that could lead to price volatility.

Risks

• Natural or environmental disasters, including severe weather and widespread diseases, can disrupt economies and markets, negatively impacting commodity prices and investment values.
• Geopolitical instability and military hostilities, such as the Russia-Ukraine conflict and Middle East conflicts, can significantly amplify financial market volatility and affect commodity prices due to supply chain disruptions and regional importance.
• The presence of 'contango' in futures markets (where near-month contracts are priced lower than later-expiring contracts) can adversely impact fund returns as positions are rolled.
• Illiquidity in commodity markets due to market conditions, regulatory considerations, or daily price limits on futures exchanges can prevent prompt liquidation of positions.
• Exposure to credit risk from counterparties (clearinghouses, financial institutions) in derivative contracts, with no assurance that they will satisfy their obligations.
• Potential future regulatory changes by bodies like the CFTC or under the Dodd-Frank Act could materially alter the nature of investment or the ability to implement investment strategy.
• Position limits, aggregation limits, accountability levels, and daily price fluctuation limits imposed by regulatory bodies and exchanges can restrict trading, force liquidation, or limit new share creations/reinvestments, adversely affecting investment objectives.
• Global economic shocks can quickly render underlying assumptions and expectations outdated or inaccurate, potentially leading to significant losses.

Future Outlook

The Sponsor anticipates that interest income will increase the NAV of each Fund, with earned interest income being reinvested or used to pay expenses. The market outlook for corn, soybeans, and wheat indicates that global consumption is expected to be slightly higher than global production for the 2025-26 crop year, suggesting a tight supply-demand balance. Geopolitical conflicts, such as the Russia-Ukraine war, continue to amplify market volatility and disrupt commodity supplies, with the Sponsor unable to predict when high volatility levels will subside. The potential for contango or backwardation in futures markets will continue to impact fund returns. The CFTC staff's time-limited no-action relief from certain aggregation rules expires on August 12, 2025, which could affect the Funds' ability to establish and maintain positions.

Management Comments

• The change in total net assets year over year for CORN was generally due to a combination of a depreciation of commodity prices and investor out-flows which was driven by excess supply estimates, and mandates for plant-based renewable fuels contributing to weakness.
• The change in total net assets year over year for SOYB was generally due to a combination of a depreciation of commodity prices and investor out-flows which was driven by decreased supply estimates, and mandates for plant-based renewable fuels contributing to weakness.
• The change in total net assets year over year for CANE was due to the stabilization of prices worldwide, strong demand and with modestly higher production which accelerated investor interest.
• The change in total net assets year over year for WEAT was generally due to a combination of the depreciation of commodity prices and investor in-flows which may be attributed to ample wheat stocks from Russia and record exports flowing from the Black Sea continue to weigh on global wheat prices.
• The change in total net assets year over year for TAGS was generally due to a combination of depreciation of commodity prices and investor out-flows which was driven by the ample supply estimates and stabilization of prices worldwide.
• The Sponsor cannot predict the impact of factors such as seasonality, availability and demand for substitute commodities, global economic conditions, and geopolitical events on fund performance.
• The Sponsor has no ability to discern when current high levels of volatility in global commodity markets will subside.

Industry Context

The agricultural commodity markets (corn, soybeans, sugar, wheat) are influenced by global production and demand, weather patterns, and geopolitical events. For the 2025-26 crop year, global consumption for corn, soybeans, and wheat is estimated to be slightly higher than production, indicating a tight supply-demand balance. The ongoing Russia-Ukraine conflict and Middle East conflicts continue to significantly amplify geopolitical tensions and financial market volatility, particularly impacting grain prices due to the region's importance in global supply and potential disruptions to transportation. The market frequently experiences 'contango' or 'backwardation,' which can affect returns. Demand for corn is driven by livestock feed and ethanol production, while soybeans are used for meal, oil, and biofuels. Sugar production is dominated by sugarcane and sugar beets, with Brazil being a key producer. Wheat prices are affected by global production, demand, and geopolitical events, with Russia and Ukraine historically being major exporters.

Comparison to Industry Standards

• The filing does not provide specific comparisons to other comparable companies, projects, or global benchmarks in a detailed, quantitative manner.
• Performance is assessed against the Fund's stated benchmark, which is a weighted average of specific futures contracts for each commodity.
• The discussion highlights market conditions like contango and backwardation, which are common phenomena in commodity futures markets, and their potential impact on returns.

Management Changes

Corporate Governance

Legal Proceedings

• A settlement agreement was entered into on April 26, 2024, and became effective on May 10, 2024, resolving all claims in the actions captioned Dale Riker v. Sal Gilbertie et al., Sal Gilbertie, et. al. v. Dale Riker, et al., and Dale Riker, et al. v. Teucrium Trading, LLC.

Related Party Transactions

• The Sponsor (Teucrium Trading, LLC) is responsible for investing assets and arranging third-party services for the Funds.
• Agricultural Funds (CORN, CANE, SOYB, WEAT) pay a monthly management fee of 1.00% per annum to the Sponsor based on average daily net assets (TAGS has no such fee).
• The Sponsor may elect to pay certain expenses on behalf of the Funds or waive the management fee, with no reimbursement sought for waived amounts.
• For the six months ended June 30, 2025, recognized related party transactions for the Trust totaled $1,003,016, with $34,948 waived by the Sponsor (specifically for TAGS).
• Certain employees and officers of the Sponsor are licensed as registered representatives of PINE Distributors LLC (Marketing Agent) and engage in marketing activities for the Funds, receiving fees for these services.

Stakeholder Impact

• Shareholders: Experienced mixed returns, with most funds seeing a decrease in NAV per share. Reduced net losses for most funds could be seen as a positive, but overall asset decline may concern some. The resolution of legal proceedings reduces uncertainty.
• Management/Sponsor: Continues to manage the funds and absorb some expenses through waivers, indicating ongoing commitment. The settlement of legal disputes removes a significant distraction.
• Customers (Investors): Provided with transparency through daily NAV and indicative fund value dissemination, aiding trading decisions.
• Service Providers: Continue to provide administrative, custodial, marketing, and brokerage services under existing agreements, receiving fees based on assets or services rendered.
• Regulatory Authorities: The Trust and Sponsor continue to comply with SEC, CFTC, and NFA regulations, including new accounting standards and position limits.

Next Steps

• The Sponsor will continue to manage the Funds' investments to track their respective benchmarks.
• The Sponsor will continue to monitor and manage credit risk with FCMs and swap counterparties.
• The Sponsor will continue to evaluate the impacts of new accounting pronouncements, specifically ASU 2024-03, for adoption by December 31, 2026.
• The Trust will continue to file periodic reports with the SEC.

Key Dates

Recommendation

The Trust's financial performance for the first half of 2025 shows a notable reduction in net losses for most funds, with the Soybean Fund even turning profitable. This indicates some operational improvements or more favorable market conditions compared to the previous year. However, the overall decline in combined net assets and NAV per share for most funds, coupled with persistent market volatility in agricultural commodities and geopolitical risks, suggests continued headwinds. While the resolution of legal proceedings is a positive, the core business remains exposed to unpredictable commodity price fluctuations. A 'hold' recommendation is appropriate for existing investors, as the improved loss figures might signal a bottoming out or stabilization, but new investors might find more compelling opportunities elsewhere given the ongoing uncertainties and general decline in asset base.

Keywords

Commodity Trust, SEC Filing, 10-Q, Agricultural Futures, Corn Futures, Soybean Futures, Sugar Futures, Wheat Futures, ETF, Commodity Pool, Financial Report, Investment Performance, Risk Management, Contango, Backwardation