ETF Spotlight on Teucrium Corn Fund (NYSEArca: CORN), part of an ongoing series.
Assets: $125.26 million.
Objective: The Teucrium Corn Fund tries to reflect the daily performance of the closing settlement prices on three futures contracts for corn that trade on the Chicago Board of Trade.
Holdings: Corn futures contracts.
What You Should Know:
- CORN has an expense ratio of 1.49%.
- Potential investors may benefit from the fund’s ability to diversify an investment portfolio or hedge against inflation. Traders can obviously speculate on the price movements of corn.
- Corn futures contracts on the CBOT expire on a specific date in March, May, July, September and December, which means that the fund will have to roll contracts five times a year to avoid taking physical delivery of the corn when the the contracts mature.
- The ETF tries to mitigate the effects of contango or backwardation by holding three different futures contracts.
- It should be noted that investors will have to fill out a K-1 form during tax season since the ETF is structured as a partnership.
The Latest News:
- The U.S. Agriculture Department said Tuesday said corn supplies are forecast to be higher than expected this fall, the Associated Press reported.
- “Corn prices continue to react to a number of factors, including general economic and financial developments,” said University of Illinois agricultural economist Darrel Good, according to Farm Press. “Much of the price strength in July, however, has been associated with indications of continued strong demand and some ongoing concerns about potential yield and production”
- “There is some ongoing disagreement above the amount of corn used for ethanol production,” Good added. “For the 2009-10 marketing year, USDA estimates of corn use imply a conversion rate of 2.74 gallons of ethanol per bushel of corn. Trade associations indicate that the correct conversion rate is 2.8 gallons per bushel and suggest that less corn has been used for ethanol production than implied by the USDA.”
- Ethanol production in June was 4.7% higher year-over-year. [ETF Chart of the Day: Corn.]
- Dry weather threatens corn yields. “Farmers are scared to sell any more bushels with the hot weather in the forecast,” stated Mark Schultz, chief analyst for Northstar Commodity Investment, reports Jeff Wilson for Bloomberg. “Domestic feed manufactures and food and fuel producers are bidding more and that’s keeping supplies out of the export market.”
For past stories in this series, visit our ETF Spotlight category.
Teucrium Corn Fund
Max Chen contributed to this article.