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Corn Prices Traded below Critical Moving Averages

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Trend in corn prices

Corn futures contracts for March 2016 expiry were trading near the crucial support of $3.70 per bushel on February 4, 2016. Prices fell for the second consecutive trading day. They fell below the critical support. The volume of the contracts rose by 18.6%. The open interest fell slightly by 0.39% on February 4, 2016. Prices trade above the 20-day and 50-day moving averages of $3.65 and $3.67 per bushel on February 4, 2016. The prices are expected to remain in the projected channel.

The above chart indicates that prices could be $3.75–$3.65 per bushel in the short term.

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Price drivers

Despite a strong weekly export sales report from the U.S. Department of Agriculture, corn prices fell on February 4, 2016. CONAB, Brazil’s National Food Supply Agency, raised the 2015–2016 corn production by 1 million tons. It pushed US soybean prices down. Statistics Canada reported that the inventory for marketing year 2015–2016 could fall by 17% and impact corn prices.

In contrast, the US dollar depreciated by 0.81% on February 4, 2016. It supported the corn export sentiment.

Stocks review

The fall in corn prices pushed the corn inventory’s value down for corn trading and producing businesses. Tyson Foods (TSN) fell by 1.8% on February 4, 2016, for the third consecutive trading day. During the period, it fell by 4.4%. Ingredion (INGR) and ConAgra Foods (CAG) fell by 1.1% and 2.7% on February 4, 2016. They continued to drag prices down from the upward channel. However, CHS (CHSCP) recovered from the fall the previous day. It rose slightly by 0.10% on February 4, 2016. The PowerShares DB Agriculture Fund (DBA) continued its downward movement. It fell by 0.50% on February 4, 2016.

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