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After 5 Straight Days of Falling, Corn Prices Rise

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Trend for corn prices

Corn future contracts for March expiration were trading near the key support level of 360 cents per bushel on the consecutive second trading day. Prices breached this critical support level on December 29, 2015. However, from the structural support, they climbed back above the level and increased. The volume of the contracts increased continuously on the second trading day by 24.9% on December 29. The open interest also improved by 0.74% on the day. Prices continue to trade below the key moving averages.

The above graph indicates corn prices should remain in the range of 355 cents and 370 cents per bushel in the near term.

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Price drivers

Unfavorable weather conditions in South America supported the corn futures prices on December 29, 2015. The EPA’s (U.S. Environmental Protection Agency) decision to give relief to the ethanol mandate negatively affected the corn futures prices on the day. The US dollar rose by 0.27% on December 29, 2015, and hurt the corn export sentiment. A higher dollar hurts the export sentiment.

Stocks review

Corn producers and traders gained from higher corn prices on December 29, 2015. That day, Bunge (BG) and Tyson Foods (TSN) rose by 1.3% and 0.69%, respectively, recovering from the previous day’s fall. Archer-Daniels Midlands (ADM) rose by 1.6% on December 29 to improve the declining price movement in the last two days. ConAgra Foods (CAG) rose 0.69% for the second consecutive day on December 29. ETFs such as the PowerShares DB Agriculture ETF (DBA) rose 0.54% on December 29, recovering slightly higher than the previous day’s fall.

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