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Weak Grain Crushing Report Influenced Corn Prices

Sean Brown

Here's What Really Drove Grain Prices on March 1

Corn prices rise on March 1

Corn futures on CBOT (Chicago Board of Trade) for March delivery rose by 0.07% and settled at $3.53 per bushel on March 1, 2016. The increase came despite the weaker-than-anticipated USDA (US Department of Agriculture) January 2016 Grain Crushing and Coproduct Production Report. By contrast, the Teucrium Corn Fund (CORN) did not follow price movement on CBOT and declined by 0.34% on March 1, 2016.

Corn crushing for January 2016 reached 491.3 million bushels, down by 2% from December 2015 and down by 1% from January 2015. This included 91.6% of alcohol production and 8.4% for other reasons, but the beverage alcohol production pegged about 3.4 million bushels of corn, 21% higher than in December 2015. The alcohol fuel output reached 441.3 million bushels, declining by 2% over the previous month. This affected corn prices.

According to a report from the French grower’s group AGPM, corn planting in France could reduce by 6% in the next planting season. This would be the second consecutive year of declines in the corn sowing. For the 2015–2016 planting season, French corn planting dipped by 5.6%. The lower levels of corn planting came from lower rate projections. Less competition in export markets could increase the shares of the US exports as the USDA’s projections foresee that corn could be an attractive yielding crop for the marketing year 2016–2017 for US production.

Stock discussion

The advance in corn prices supports the shares of corn producing and trading companies by boosting their profitability. Bunge (BG), ConAgra Foods (CAG), Archer Daniel Midlands (ADM), and Tyson Foods (TSN) rose by 0.56%, 1.1%, 1.5%, and 1.3%, respectively, on March 1, 2016, with the rise in corn prices. The PowerShares DB Agriculture Fund (DBA) dipped by 0.25% on March 1, 2016, however.

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