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Why Corn Prices Might Rise above the $3.55 Support Level

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Mar. 7 2016, Updated 12:16 p.m. ET

Trends in corn prices as of March 4

March corn prices were trading near the crucial support of $3.55 per bushel for the seventh consecutive trading day on March 4, 2016. But prices have moved little in the past seven-day period, recovering from the previous day’s drop on March 4. Volumes declined by 44.1%, and open interest decreased by 20.6% on the same day. Prices have continued to trade below the key simple moving average for the ninth consecutive trading day.

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Price drivers for corn

As you can see in the graph above, corn prices could continue to oscillate in the bracket of $3.50 and $3.60 per bushel in the short term. The recent strength in the Brazilian real hurt Brazilian corn exporters on March 4, supporting US corn in export prospects, and the US dollar dropped by 0.38% on March 4, further supporting US corn export sentiments in the international trade.

However, the latest report from INTL FC Stone suggests a rise in output from previous estimates, which indicates increased competition in corn exports, adversely affecting the prospects of US corn.

Stock review

Corn companies tend to rise with the rise in corn prices. On March 4, 2016, the share prices of CHS (CHSCP) increased by 1.3% after two consecutive days—a drop of 0.39% over the two-day period. Dean Foods (DF) recovered from the previous day’s decline, rising by 0.78% on March 4.

Meanwhile, the shares prices of Ingredion (INGR) and Campbell Soup (CPB) increased for the fourth and third consecutive trading days by 1.5% and 0.15%, respectively, on March 4. These stocks rose by 5.3% and 1.4% during such period. The PowerShares DB Agriculture Fund (DBA) advanced by 1.1% for the third consecutive trading day with the increase in corn prices on March 4, showing an improvement of 2.2% during the two-day period.

Now let’s examine soybean prices as of March 4.

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