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Corn Prices Are Trading Near Key Resistance Levels

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Dec. 2 2015, Published 3:57 p.m. ET

Corn price trends

Corn futures prices for December contracts were trading near the resistance level of 368 cents per bushel on December 1, 2015. Corn prices have been near this support level since November 10, 2015. Corn prices rose for the second consecutive day on December 1, 2015. At the end of the day, prices were trading near the resistance levels. Corn futures prices were above their 20-day moving average while they continue to be lower than their 50-day and 100-day moving averages of 376 and 378 cents per bushel. Ever since the November WASDE (World Agricultural Supply and Demand Estimates) report was released, corn prices had a strong resistance near 370 cents.

Corn prices might seem to be on a slight upward trend, but excess supply from Argentina due to speculation of changes in the export policy might drag corn prices down in the near term.

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Price drivers

Stronger-than-expected crushing data from grains crushing and the co-products production report boosted corn prices on December 1, 2015. Prices received further support from the depreciated US dollar index, which fell 0.43% on the day. The US Environmental Protection Agency’s projection of ethanol usage in 2016 rose by 270 million gallons, which was in line with the analyst consensus. Anticipated international ethanol production in 2015-16 was ~5.3 billion bushels, which supported the corn demand sentiment.

However, supply sentiment received support from favorable weather conditions in southern Brazil, which could lead to export competition in the near term.

Stock review

Producers like CHS (CHSCP), Archer-Daniels-Midland (ADM), Tyson Foods (TSN), and Bunge (BG) will benefit from the rise in corn prices. On December 1, 2015, the second consecutive day of corn price increases helped Archer-Daniels-Midland (ADM), CHS (CHSCP), and Tyson Foods (TSN), which rose by 0.58%, 0.91%, and 1.3%, respectively. The PowerShares DB Agriculture Fund ETF (DBA) rose by 1.4% on the day. On the other hand, Bunge (BG) fell by 1.1% on December 1, 2015.

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