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How Long Can Corn Prices Hold in a Favorable Supply Sentiment?

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Corn futures rise

December contracts for corn futures trading on the Chicago Board of Trade (or CBOT) were down, but they rose on October 22, 2015. Due to a weaker weekly export report and a stronger US dollar index on October 22, corn prices declined despite touching a high the previous day.

Corn prices opened strong relative to the last close above 380 cents and touched a high of 383.5 cents. However, a weaker data release pushed corn prices down, and they closed just above 375 cents.

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Support and resistance

The speculation of increased supply continued for corn futures. Anticipating favorable supply results on Monday, October 26, 2015, speculators were selling the corn futures for December contracts on October 22. The open interest declined by 3.63% on the day to 672,270 contracts on the day. The volume of the corn futures contracts also decreased by 38.83% on October 22.

Amid the speculative trades on the day of an important data release, the volumes were lower to the weak sentiments. This might also signal declining trading interest as producers have held the crop, as prices oscillated below the cost projections by US Department of Agriculture of $4 per bushel. The prices could vary in the range of 370–390 cents per bushel. The corn price pattern expectations by the analysts are mixed.

Food business stocks

ConAgra Foods (CAG) and Tyson Foods (TSN) continued their early-day rise at a higher rate on October 22, 2015. Bunge Limited’s (BG) stock prices also increased on October 22. Archer Daniel Midlands (ADM) fell by 3.14% on the same day while the Power Shares DB Agriculture ETF (DBA) continued its previous day’s decrease at a 0.10% increased rate.

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