Corn prices rise

Corn futures on the CBOT (Chicago Board of Trade), for March delivery, rose by 1.13% and settled at $3.57 per bushel on January 8, 2016. Corn prices rose due to unfavorable weather conditions in Brazil. It threatens a reduction in the corn production. ETFs like the Teucrium Corn Fund (CORN) followed the CBOT and rose by 1.05% on January 8, 2016.

Unfavorable Brazilian Weather Could Reduce the Corn Output

The weather conditions haven’t been favorable at the beginning of the corn and soybean planting season. The northern regions in Brazil were facing a dry spell that extended to approximately ten weeks. The southern areas in Brazil had excessive amounts of rain. The unfavorable weather conditions negatively influenced the sowing and harvesting period. Safrinha corn is planted in the fields vacated by the soybean crop. Due to delayed planting and extended dry weather conditions, the soybean harvest in the key soybean producing state Mato Grosso only progressed by 0.3% compared to 1.9% the year before. The delay in the soybean harvest is crushing the window of time for planting and growing Safrinha corn in Brazil. Analysts expect that it could significantly reduce the crops in the region. Lower production sentiment from Brazil supported the US corn export expectations and futures prices on January 8, 2016.

According to the CHS Hedging report, the corn basis in Argentina rose by $0.10 per bushel during the last ten days. Rising export prospects supported the futures prices amid fewer policy requirements and significant currency devaluation. Argentina’s corn is still $0.15 per bushel cheaper than the US Gulf. The fall in the competitiveness could support US corn in export markets.

Stock discussion

Corn trading and producing businesses would receive support from the rise in corn prices. Companies like Tyson Foods (TSN) and ConAgra Foods (CAG) rose by 0.25% and 0.50% on January 8, 2016, with the rise in corn prices. ETFs like the PowerShares DB Agriculture Fund (DBA) rose by 0.35% on January 8, 2016. However, CHS (CHSCP) and Ingradion (INGR) fell by 0.16% and 0.27% on January 8, 2016.

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