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Corn Prices Could Stay above the Key Support

Sean Brown

Here Comes the Rain! Weather Changes Supported Grain Prices

(Continued from Prior Part)

Trend in corn

March futures corn contracts were trading above $3.70 per bushel on February 3, 2016. Prices have been near the key support level for more than ten trading days. They’re expected to remain in the bracket before the WASDE report is released next week. Prices continued and were expected to stay in the range despite trading near the resistance. The volume fell by 24.8%. The open interest fell by 0.45% on February 3, 2016. Prices continued to trade above the 20-day and 50-day moving averages, but below 100-day moving average on February 3, 2016.

The above chart suggests that prices could be $3.65–$3.75 per bushel in the near term.

Price drivers

The U.S. Energy Information Administration’s Weekly US Ending Stocks of Fuel Ethanol advanced near an all-time high. This had a negative impact on the crucial input corn for ethanol production on February 3, 2016. Informa Economics’s projection of South American corn productions increased. It indicated greater competition for US corn in the export market. It dragged corn prices down.

However, the US dollar depreciated by 1.5% on February 3, 2016. It supported corn exports and prices on February 3, 2016.

Stocks review

Corn producing and trading businesses are negatively influenced by the fall in corn prices. On February 3, 2016, Tyson Foods (TSN) fell by 0.54% for the second consecutive trading day. During the period, prices fell by 2.6%. In contrast, Archer Daniels Midland (ADM),), ConAgra Foods (CAG), and Ingredion (INGR) recovered from the fall the previous day. They rose by 3.3%, 0.54%, and 0.29% on February 3, 2016. However, these shares couldn’t recover enough from the sharp fall the previous day by 8.7%, 2.6%, and 0.85%, respectively. The PowerShares DB Agriculture Fund (DBA) recovered from the fall the previous day. It rose by 0.40% on February 3, 2016.

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