Why Did Weekly Export Sales Influence Grain Prices?
Corn prices fell
Corn futures on the CBOT (Chicago Board of Trade), for March delivery, fell by 1.2% and settled at $3.55 per bushel on February 25, 2016. Corn prices fell due to the weaker-than-anticipated export report. The Teucrium Corn Fund (CORN) followed the price movement on the CBOT. It fell by 0.90% on February 25, 2016.
The U.S. Department of Agriculture’s Weekly Export Sales report was released on February 25, 2016. The corn net weekly export sales were 934,440 metric tonnes for the week ending on February 18, 2016. It was 11% lower than the previous week. However, it was 10% higher than the prior four-week average. The rise in US corn exports was from Japan, Costa Rica, Colombia, and Mexico. In contrast, reductions were reported from the Dominican Republic and the French West Indies. The lower strength in the Weekly Export Sales report had a negative impact on corn futures prices on February 25, 2016.
The Brazilian corn harvest increased its pace, according to the report of Allendale. The harvest reached 23% for the first corn crop. It’s ahead of last year’s harvest. The stronger harvest indicates higher exports and lower shifts to the US. The report emphasizes the progress of the second corn crop or Safrinha corn. The progress of the Safrinha planting has been substantially higher at 51%—compared to 39% last year. The speculation of stronger output from the timely harvest of the first crop and planting of the Safrinha corn could increase the competition for the US production. It hurt corn futures prices on February 25, 2016.
According to projections from the International Grains Council, the global corn production could increase by 10 million tons from the 2014–2015 season to 969 million tons. The speculation of higher competition in the export market would hurt US corn prices. It dragged futures prices down on February 25, 2016.
The decrease in corn prices has a negative impact the shares of corn producing and trading businesses. On February 25, 2016, with the decline in corn prices, the shares of CHS (CHSCP) fell by 0.20%. In contrast, the prices of Archer Daniels Midland (ADM), Tyson Foods (TSN), and Ingredion (INGR) rose by 2.3%, 1.6%, and 0.98% on February 25, 2016. The PowerShares DB Agriculture Fund (DBA) fell by 0.15% with the slide in corn prices on February 25, 2016.
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