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Corn Prices Played above Crucial Support Levels on January 5

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Trend for corn prices

Corn futures prices for March expiry were trading near their crucial support level of 355 cents per bushel on January 5, 2016. Corn prices recovered from the sharp downward movement on January 5.

Corn futures prices rose after three consecutive days of falling prices, totaling 2.62%. However, volumes declined by 22.51% and open interest rose by 1.75% on the day. The key moving averages were significantly higher than the current price levels. The chart below suggests that prices may oscillate in the bracket of 345 cents–360 cents per bushel in the short run.

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Price drivers

An unfavorable weather forecast in Brazil, the United States’ key competitor in corn production, reduced export indications on January 5, 2016. The US Commodity Futures Trading Commission’s (or CFTC) bearish net short position induced short covering that supported corn prices on the day.

In contrast, increased competition from Argentina and the 0.51% appreciation of the US dollar on January 5, 2016, kept corn prices under pressure on the day.

Review of corn stocks

Producing and trading businesses can increase in value with the rise in the corn prices. With the positive price movement on January 5, 2016, Archer Daniel Midlands (ADM) and ConAgra Foods (CAG) rose by 1.1% and 0.07%, respectively. This occurred after three consecutive days of downward movement, as ADM fell by 3.37% and CAG fell by 2.74%. On January 5, 2016, Ingredion Inc. (INGR) also increased by 1.3% after a two-day fall in prices of 5.35%.

On the other hand, CHS Inc. (CHSCP) dropped by 0.81% on the consecutive second trading day on January 5, 2016. The PowerShares DB Agriculture ETF (DBA) fell by 0.64% on the straight second day, registering a drop of 1.3%.

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