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Corn Prices Trade in a Symmetrical Triangle Pattern

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Trend in corn prices

The corn futures contracts for March expiry traded above $3.75 per bushel on December 15, 2015. Corn prices were in a symmetrical triangular pattern. According to the speculation of excess supply from South American supplies, corn prices could take a downward price movement at the breakout. Corn prices were trading over the 20-day simple moving averages of $3.73 per bushel. It could test the 50-day simple moving average of $3.81 per bushel in the near term.

The above price chart suggests that corn prices could be $3.75–$3.80 per bushel in the near term.

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Price drivers

The EPA’s (US Environmental Protection Agency) lower ethanol usage in November hurt the ethanol production from corn. The speculation of lower ethanol production dragged corn prices down. Corn is the input for producing ethanol. The US dollar appreciated by 0.54% on December 15. This hurt the corn export sentiment on December 15, 2015.

The speculation of unfavorable weather in South Africa pushed the corn production sentiments lower. It supported US corn export opportunities in the near term. It also supported US corn futures prices.

With the fall in corn prices, corn producing and trading businesses rose on December 15, 2015. After falling for two and three days, Bunge (BG) and Archer Daniels Midland (ADM) rose by 1.3% and 2% on December 15, 2015. ConAgra Foods (CAG) rose by 0.84%. It had fallen for six consecutive days. Tyson Foods (TSN) rose for the second day by 2.3%. It rose 2.70% in this period.

In contrast, the PowerShares DB Agriculture Fund ETF (DBA) fell for the third straight day by 0.20%. It fell by 1.2% in this period.

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