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Corn Prices Fell despite Lower Ethanol Production

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Corn prices fell

March corn futures contracts, trading on the CBOT (Chicago Board of Trade), fell by 0.20% and settled at $3.65 per bushel on December 23, 2015. Corn futures prices fell despite lower ethanol production supporting corn buying. ETFs like the Teucrium Corn Fund (CORN) followed the CBOT and fell by 0.25% on December 23, 2015.

The EIA (U.S. Energy Information Administration) reported the US Weekly Ethanol Plant Production on December 23, 2015. For the week of December 12–18, 2015, the ethanol production was 973,000 barrels per day lower. It was 27,000 barrels per day lower than the previous week. Lower plant production supported the ethanol futures prices on December 23, 2015. They rose by 2.8% to $1.42 per gallon. It also helped the ethanol production prospects through increased demand. Since corn is the essential input for ethanol production, it supported the corn demand on December 23, 2015. Despite positive cues for the corn demand, corn futures prices fell on the day.

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The weather conditions in South American regions are still the focus for corn traders. Favorable weather forecasts with precipitation kept the hopes high for the week ending on December 27, 2015. The ten-day forecast projects another dry spell in the northern Brazilian region. If the precipitation during the week isn’t sufficient, it could stress the corn plants during the first week of 2016. The speculation of dry weather conditions put corn prices under pressure on December 23, 2015.

Stock discussion

The fall in corn prices is negative for corn trading and producing companies’ profitability. However, the third consecutive day of a price fall in corn continued to support the corn producers and traders. On December 23, Tyson Foods (TSN), Archer Daniels Midlands (ADM), Bunge (BG), and ConAgra Foods (CAG) rose by 0.41%, 0.74%, 1.3%, and 2.4%. ETFs like the PowerShares DB Agribusiness Fund ETF (DBA) rose by 0.69% on December 23, 2015.

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