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Higher Fuel Ethanol Stocks Dragged Corn Prices Down

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Corn prices fell

Corn futures on the CBOT (Chicago Board of Trade), for March delivery, fell by 0.40% and settled at $3.71 per bushel on February 3, 2016. Corn prices fell due to the EIA’s (U.S. Energy Information Administration) higher-than-expected Weekly US Fuel Ethanol Stock report released on February 3. The Teucrium Corn Fund (CORN) followed the price movement on the CBOT. It fell by 0.23% on February 3, 2016.

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The EIA reported the Weekly US Ending Stocks of Fuel Ethanol on February 3, 2016. Ethanol stocks for the week ending on January 29, 2016, were at 22,362,000 barrels. They rose by 926,000 barrels from the previous week. It’s important to note that 4% higher week-over-week fuel ethanol inventories were near the record high of 22,713,000 barrels. Higher ethanol stocks dragged the demand sentiment down. Ethanol prices dropped by 1.08% on the day. The fall in ethanol prices on February 3, 2016, weighed on corn as a principal input.

Stronger South American output prospects had a negative impact on US corn prices on February 3, 2016. Informa Economics, a private analyst, raised the top corn producing countries in South America—Argentina and Brazil—on February 3, 2016, for marketing year 2015–2016. Argentine corn prospects rose by 4 million tons to 26 million tons. Brazilian corn production is pegged at 81.6 million tons. It rose by 0.3 million tons from the previous estimates. The rise in the output was due to the rise in the corn planting area. The speculation of stronger export competition in the export market from South American corn supplies pushed US corn prices down on February 3, 2016.

Stock discussion

The shrink in corn drags the share value of corn trading and producing companies. Tyson Foods (TSN) fell by 0.15% on February 3, 2016. However, Archer Daniels Midland (ADM), Ingredion (INGR), and ConAgra Foods (CAG) rose on February 3, 2016, by 3.3%, 0.29%, and 0.54%, respectively. The PowerShares DB Agriculture Fund (DBA) rose by 0.40% on February 3, 2016.

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