The recent price pressure for corn is a plus for the exchange traded fund Teucrium Corn Fund (NYSEArca: CORN). The drought in the mid-west prompted the USDA to make successive cuts to crop projections over the past several weeks.
“The fallout of the aridity hasn’t been relegated to the corn markets. Wheat and beans have seen substantial positive price performance. Front-month wheat has jumped to over $9 per bushel from roughly $6.30 a month ago. Over the same period, soybeans jumped to $16.80 from $13.80,” Abraham Baillin for Morningstar wrote in a recent article. [Grain ETF Spikes 10% on Week on Mid West Drought]
The recent adjustments of the USDA cut to crop projections has created a supply shock. Corn prices have jumped and September corn futures are up 50% from mid-June contracts. Analysts are pondering if corn prices will weaken once the harvest takes place.
Nevertheless, the hot, dry weather is not expected to let up soon. The corn focused ETF is up 27.3% since June 21, creating interest in this single commodity fund. Investors should note that funds focused on one commodity tend to be more volatile than a mixed basket.