ETF Trends
ETF Trends

Exchange traded funds tracking grains and corn prices have fallen heavily since the summer along with most commodity prices.

Markets were awaiting a crop report from the U.S. Department of Agriculture later Friday.

A good harvest season has brought a steady supply of grains to the global markets, suppressing grains markets and ETFs that track them.

Grains prices have taken a hit after the International Grains Council recently announced that the 2011-2012 world wheat supply was 3% higher year-over-year due to increased production and carryover stocks, according to Corn and Soybean Digest. The council also noted that the world total production will be the second largest on record this year. However, U.S. production estimates are down 10% year-over-year because of lower-than-expected spring production.

Credit Suisse analysts warn of deteriorating agricultural prices since the market has not provided good value, uncertain weather, ongoing risks from the Eurozone and deleveraging pressures, according to a Wall Street Journal article.

Teucrium Corn (NYSEArca: CORN)

Uncertainty surrounding the Eurozone has kept the grains market more subdued and helped strengthen the U.S. dollar, which in turn has hurt commodities prices. Commodities are priced in U.S. dollars and are more expensive to foreign buyers when the greenback appreciates.

Market observers are also waiting on the U.S Department of Agriculture’s report as many are already expect a slowdown in exports. However, analysts also anticipate additional bearish data that could indicate greater supply of most grains, especially corn and wheat.

“Looking ahead to Friday, our personal estimate is for corn stocks to rise from 843 up to 899 million bushels. Some thoughts on that increase is that USDA could see the slowdown in exports as a surprise while the increase in ethanol was expected,” Allendale analysts said in Futures Magazine. “Bears have a recent trend, poor exports and a give up of dollar support on their side.”

Dry weather during South America’s planting season has helped support soybeans and corn prices. Crop supply may be damaged if the dry weather persists, some analysts said.

“An underlying current of thinking is that the weather is turning foul in South America.. and that could lead to increased demand for (the U.S. crops,” Tim Hannagan, analyst with PFG Best, said in a Reuters report.

  • PowerShares DB Agriculture (NYSEArca: DBA): down 11.50% year-to-date
  • Teucrium Corn (NYSEArca: CORN): down 21.65% over the past three months.
  • Teucrium Wheat (NYSEArca: WEAT): down 6.52% over the past month.
  • Teucrium Soybean (NYSEArca: SOYB): down 6.88% over the past month.
  • iPath DJ-UBS Grains TR Sub-Idx ETN (NYSEArca: JJG): down 21.60% year-to-date.
  • ELEMENTS MLCX Grains Index TR ETN (NYSEArca: GRU): down 20.68% year-to-date.
  • UBS E-TRACS CMCI Agriculture TR ETN (NYSEArca: UAG): down 11.81% year-to-date.
  • iPath DJ-UBS Softs TR Sub-Idx ETN (NYSEArca: JJS): down 12% year-to-date.
  • PowerShares DB Agriculture Long ETN (NYSEArca: AGF): down 13.84% year-to-date.

For more information on the grains market, visit our grains category.

Max Chen contributed to this article.

The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.