Volatile weather conditions across the U.S.Midwest are disrupting the normal planting season and supporting a rebound in soft commodities related exchange traded funds.
Grains have fallen off this year as ample supply has kept pressure on agricultural commodities. Year-to-date, Teucrium Corn Fund (NYSEArca: CORN) fell 12.3%, Teucrium Soybean Fund (NYSEArca: SOYB) declined 6.5% and Teucrium Wheat Fund (NYSEArca: WEAT) dropped 16.3%.
However, the soft commodities have rebounded over the past week, bouncing above their short-term 50-day trend line and shooting toward their long-term resistance. Over the past week, the CORN was 5.6% higher, SOYB was up 3.1% and WEAT advanced 7.7%.
Agricultural commodities prices were strengthening on fears that storms in the grain belt would diminish supply, reports Gregory Meyer for the Financial Times.
The U.S. Department of Agriculture will give its official survey of farmers’ planting plans on Tuesday. Analysts previously anticipated that farmers would plant record acres of soybeans and corn, the two most widely observed crops in the U.S., but more observers are having doubts as summer storms and damaging winds lash the Midwest.
For instance, winds across Iowa and Illinois knocked over young corn stalks in “garden spot areas, potentially the best-yielding areas, and the market is taking notice,” Mike Zuzolo, president of Global Commodity Analytics said in the FT article. “Because soils are so saturated, hail and wind exacerbate an already bad problem for producers.”
The wet conditions have also slowed harvest of U.S. winter wheat, which has fueled concerns that moisture could have damaged teh quality of grains.