Corn ETF Wilts As Stockpiles Close in on 20-Year High

ETF Trends

After surging on a record dry spell, the corn exchange traded fund has been withering over the past year as a bumper crop year pushes U.S. stockpiles to a 19 year high.

The Teucrium Corn Fund (CORN) was down 0.9% Thursday. CORN fell 4.6% over the past month and dropped 30.1% over the last year.

Analysts project that inventories on Dec. 1, the first tally since the harvest was complete, totaled 10.764 billion bushels, or a 34% increase year-over-year, the largest gain for the date since 1994, reports Jeff Wilson for Bloomberg.

Framers across the world are fueling a global glut in corn after a the worst drought in half a century decimated crops in 2012 and skyrocketed corn prices. [How High Can Corn ETF Rally on Drought?]

Corn futures touched a record $8.49 a bushel in 2012, compared to March futures, which are falling close to $4.0 a bushel.

“We have moved away from a supply deficit after the 2012 U.S. drought to one of surplus corn supplies,” Bill Tierney, the chief economist for AgResource Co., said in the article. “It will take two or more years for demand to catch up to more-abundant inventories.”

On the demand side, global corn consumption is expected to rise to a record 936.7 million tons, increasing for an 18th straight year, as a rising middle class in emerging markets bolsters demand for meat, which in turn increases usage of corn as cattle feed. In the U.S., domestic corn usage is expected to be 4.13 billion bushels in the first quarter.

Some contrarian bets are pointing to a support at the current corn price levels. From a short-term view, corn is in the middle of its best seasonal period of the year, and momentum could turn positive after sentiment nears bearish levels not seen since 2009, writes J.C. Parets, Founder & President of Eagle Bay Capital, for All Star Charts.

Teucrium Corn Fund

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