Corn futures and the Teucrium Corn Fund (NYSEArca: CORN) are in the midst of a gloomy stretch that has seen the former plunge 46% over the past two years and the latter shed almost 37% over that period, but the commodity could be ready for stronger showings.
Soft commodities have rebounded over the past week, bouncing above their short-term 50-day trend line and shooting toward their long-term resistance. CORN entered Friday with a one-week gain of 5.6% and is adding to that upside today with a pop of 1.7% on volume that is more than triple the three-month trailing average. CORN’s technicals are also improving.
“At this time, Corn futures look to be working on a breakout of a 2-year falling channel, which is a positive for them. Corn now looks to be testing the top of a pennant pattern at this time. Should it break above this level, it could attract more buyers,” according to Chris Kimble of Kimble Charting Solutions.
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 a Financial Times article. The wet conditions have also slowed harvest of U.S. winter wheat, which has fueled concerns that moisture could have damaged the quality of grains.
Moreover, the heavy rains have impeded barges going along the Illinois river, the official delivery point for corn and soybean futures. The CME Group has already enacted measures to allow traders to delay deliveries until the river abates. [Grain, Ag ETFs Bounce]
Some investors are inching back into CORN, betting that the underlying commodity has better days ahead. The ETF has added $3.42 million in new assets this quarter.