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Will Corn Prices Continue Their Decline?

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Sep. 24 2015, Updated 8:46 a.m. ET

Corn prices decline

Corn December futures contracts trading on the Chicago Board of Trade (or CBOT) decreased by 1.04% and settled at $3.80 per bushel on September 22, 2015. Corn futures prices plunged as supply sentiments continue to mount with favorable weather conditions and early harvest process building momentum.

The Teucrium Corn ETF (CORN) declined 0.98% following CBOT futures settlement on September 22, 2015.

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US dollar hurting exports

On September 22, 2015, US dollar index (DXY) increased by 0.42% to the basket of ten currencies. So far in the current calendar year, the US dollar rose ~7.3%, which is hurting corn exports in international trade. Global currency wars are continuing to hurt US exports, which is contributing to inventories for the marketing year ending up higher.

Positive US corn yield outlook assessment released on September 21, 2015, has increased the pressure. The favorable dry weather conditions are helpful for the harvest and may add to price woes. These weather conditions would be aiding two-thirds of the US Midwest in early harvest progress. The upper Midwest region would start the corn harvest during the week ending on September 26, 2015.

Impact on stocks

For food businesses like ConAgra Foods (CAG), Bunge (BG), Tyson Foods (TSN), and Archer-Daniels-Midland (ADM), declines in corn and other grain prices can have differing effects as these are input costs to some. These stocks and the Materials Select Sector SPDR ETF (XLB) declined on September 22, 2015, along with the decline in corn prices and weakness among other agricultural products.

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