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Why Did High Export Sales Support Corn Prices?

Sean Brown

Why Did Strong Weekly Export Sales Drive Grain Prices?

(Continued from Prior Part)

Corn prices rose

Corn futures on the CBOT (Chicago Board of Trade), for March delivery, rose slightly by 0.97% and settled at $3.62 per bushel on March 10, 2016. Corn prices rose due to the favorable Weekly Export Sales report from the USDA (U.S. Department of Agriculture). The Teucrium Corn Fund (CORN) rose by 0.77% with the rising price movement on the CBOT on March 10, 2016.

The USDA’s Weekly Export Sales report released on March 10, 2016. The net corn weekly export sales for the week ending on March 3, 2016, were 1,172,311 metric tons. The sales were 7% higher from the previous week and up 37% from the previous four-week average. Significant increases in corn exports were reported for Mexico, Japan, Colombia, Egypt, South Korea, China, and Peru. The noticeable reductions were for Saudi Arabia. El Salvador and Peru reported 2016–2017 corn exports of 20,000 tons during the period. Corn exports were near the high end of the consensus range of 0.8 million–1.2 million tons. This supported corn prices on March 10, 2016.

CONAB, Brazilian National Supply Institute, increased its projection for corn production by 180,000 tons to 83.52 million tons for 2015–2016. The rise in the projection was due to favorable weather conditions. It’s still below the USDA’s March 2016 projection of 84 million bushels. It failed to impress the US corn export prospects on March 10, 2016.

The US dollar depreciated by 1% on March 10, 2016. Dollar-denominated US corn is expected to have a favorable advantage in exports. A lower home currency supports domestic product exports.

Stock discussion

Increasing corn prices support businesses in the corn trading and producing industry. It supports the inventory value and boosts the profitability. On March 10, 2016, the shares of Ingredion (INGR) and ConAgra Foods (CAG) rose by 0.39% and 0.35%. However, Campbell Soup (CPB) and Dean Foods (DF) fell by 0.25% and 0.62% on March 10, 2016. The PowerShares DB Agriculture Fund (DBA) rose by 0.93% on March 10 with improving corn prices.

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