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Unfavorable South American Weather Supported Corn Prices

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Corn prices rose

Corn futures trading on the CBOT (Chicago Board of Trade), for March delivery, rose and closed at $3.67 per bushel on February 22, 2016. Corn prices rose due to unfavorable weather conditions in South America. The weather hurt the crop development and harvest. The Teucrium Corn Fund (CORN) rose by 0.61% on February 22, 2016, following the price movement on the CBOT.

The weather conditions in the South American regions aren’t favorable for the corn output. Argentina’s central regions are facing dry conditions after flooding in the central regions. Brazilian fields have forecasts for continued rain. The weather is expected to hurt the corn crop development and harvests. Unfavorable weather conditions in South America could hurt the quality of the output in the near term. It supported corn prices on February 22, 2016.

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The U.S. Department of Agriculture’s weekly export sales reports released on February 19, 2016. Corn’s net weekly export sales for the week ending on February 11, 2016, were 1,050,675 tons. It was 2.59x from the previous week and 20% higher than the last four-week average. A significant increase in the corn exports was recorded for Columbia, Mexico, Japan, Taiwan, and Peru. Corn exports reduced for South Korea, Guatemala, and Costa Rica. The exports were the fourth-largest of the marketing year. The exports were stronger than analysts’ estimates of 0.6–1.0 million tons. This supported the corn demand on February 22, 2016.

For a few weeks, US corn exports could continue to show stronger export sales reports. The South American crop will reach a significant harvest stage. It could start impacting global corn prices negatively. The speculation that US corn might cover significant exports during this period supported the prices on February 22, 2016.

Stock discussion

The rise in corn prices would support fertilizer companies. When producers have more income, they purchase more fertilizer. On February 22, 2016, with the rise in corn prices, Monsanto (MON), Potash Corporation (POT), Intrepid Potash. (IPI), and The Mosaic Company (MOS) rose by 1.1%, 0.44%, 3.9%, and 3.1%. The PowerShares DB Agriculture Fund (DBA) rose by 0.81% with the increase in corn prices.

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