Will Corn Prices Have Support from USDA’s September 10 Report?

Sean Brown - Author

Sep. 14 2015, Published 2:18 p.m. ET

Corn prices advance

Corn December futures contracts trading on the Chicago Board of Trade (or CBOT) rose 1.42% on September 10, 2015, and settled at $3.74 per bushel. Better export sales expectations, the consensus of lesser-than-expected supply growth, and short covering resulted in increased corn prices on September 10.

The Teucrium Corn ETF (CORN) rose 1.47% on September 10 following corn prices on the CBOT.

Corn prices had the longest rally in eight weeks due to reduced US supply outlook on slower growth projections. Traders squared off their long positions, and as a result, corn prices increased.

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After the August report

After the USDA’s August report, corn prices slumped due to massive oversupply consensus. In order to avoid risk, traders might have squared off their positions ahead of the USDA report on September 11. Planalytics forecast corn yields at 166.8 bushels per acre on September 10, which was ~1.18% lower than the August forecast. Lower supply estimates would support corn prices.

Export sales forecast by Bloomberg suggest a range of 250–500 thousand metric tons for the week ended September 3, 2015. Sentiment suggests that corn export sales will increase, since there was stability in the US dollar and corn spot prices during that week.

Many factors suggest that corn prices are due to a hike in prices. The USDA report on September 11 will be decisive on those expectations.

The recent increase in corn prices would encourage farmers to produce more by using fertilizer. It would benefit fertilizer companies such as Mosaic (MOS), Potash (POT), Intrepid Potash (IPI), and Terra Nitrogen (TNH). Shares for these businesses fell on September 10, 2015. The VanEck Vectors Agribusiness ETF (MOO) has substantial interest in these stocks.


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