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Corn Prices Could Test the Crucial Support of $3.55 per Bushel

Sean Brown

How Did Weekly Export Inspections Impact Grain Prices?

(Continued from Prior Part)

Trend for corn prices

March corn contracts were trading near the support of $3.55 per bushel at the end of the day on February 29, 2016. Prices fell for the fifth consecutive trading day. They fell by 3.8% during the period. Although the prices showed strength near the key support of $3.55 for the past two days, the prices are expected to remain in a downward trend. With the sharp downward movement continuing in corn, the volume fell by 80.9%. The open interest fell by 66.4% on February 29. The prices traded below the key moving averages.

The above chart shows that the prices could be $3.50–$3.65 per bushel in the near term.

Price drivers

The U.S. Department of Agriculture’s Weekly Export Inspection Report was weaker than anticipated on February 29, 2016. Weaker demand cues weighed on corn prices. The USDA’s Annual Outlook Forum projects stronger inventory for corn at the end of the marketing year 2016–2017. This had a negative impact on the futures prices on February 29. The Chinese corn policy is expected to drag the domestic inventory levels down. This could require trimming the imports. Weaker Chinese demand projections had a negative impact on the corn prices on the day. US dollar appreciated by 0.14% on February 29. It hurt the prospects for US corn exports.

Stocks review

The fall in corn prices had a negative impact on businesses in the corn trading and producing industry. With the fall in corn prices on February 29, 2016, the share values of Bunge (BG), Tyson Foods (TSN), and ConAgra Foods (CAG) fell for the second consecutive trading day by 1.5%, 0.64%, and 0.05%. These shares fell by 2.5%, 2.6%, and 0.99% during the period. In contrast, the shares of Archer Daniels Midland (ADM) rose for the fourth consecutive trading day by 0.49% on February 29, 2016. During the period, it rose by 3.5%. The PowerShares DB Agriculture Fund (DBA) remained unchanged despite the fall in corn prices on February 29, 2016.

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