EIA’s Weaker Ethanol Production and Stock Didn’t Support Corn



Corn prices didn’t change

Corn futures on the CBOT (Chicago Board of Trade), for March delivery, remained unchanged at the previous close of $3.69 per bushel on January 27, 2016. Corn prices didn’t change despite higher corn demand for ethanol production amid weaker production and inventory data from the EIA (U.S. Energy Information Administration). The Teucrium Corn Fund (CORN) rose by 0.05% on January 27, 2016.

The EIA released the Weekly US Ethanol Plant Production and Weekly US Ending Fuel Ethanol reports for the week ending on January 22, 2016. According to the report, the US ethanol production for the week of January 15–22, 2016, was 22,000 bpd (barrels per day) to 961,000 barrels per day. The fuel ethanol inventory at the end of January 22 was 504,000 barrels to 21,436 thousand barrels. Lower production and inventory data supported ethanol prices on January 27, 2016. Ethanol rose by 1.6% on the day. However, it didn’t help the major input corn in the ethanol production on the day.

Argentina’s weather conditions were hot and dry. They were trending opposite to the traditional El Nino pattern. Analysts think that it could have damaged the large corn plants. This could hurt the production sentiment more. The speculations of lower output from Argentina supported US corn prices on January 27, 2016.

The South African CEC (Crop Estimation Committee) expressed its fear that unfavorable hot weather conditions could hurt the corn crop in 2016. Due to the damage, analysts expect that the healthy corn production could be 6.9 million tons in 2016. The CEC projects 7.4 million tons of corn production. It fell by 25% for 2016. However, it’s stronger than anticipated. The speculations of higher corn supplies from South Africa hurt corn prices on January 27, 2016. This damaged US export estimates.

Stock discussion

The rise in corn prices benefits businesses in the corn producing and trading industry. Companies including Ingredion (INGR) and Bunge (BG) fell by 0.9% and 1.2% on January 27, 2016, despite no change in corn prices. Archer Daniels Midland (ADM) and CHS (CHSCP) rose by 0.66% on January 27, 2016. The PowerShares DB Agriculture Fund (DBA) fell by 0.15% on January 27, 2016.

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