The corn exchange traded fund plunged in recent weeks, with corn futures slipping back into a bear market less than a month after breaking into bull territory, as much needed U.S. rain ease crop concerns and potentially raise yields in the next harvest.
Since its June 17 high, the Teucrium Corn Fund (NYSEArca: CORN) declined 18.3%. CORN is now down 7.2% year-to-date.
Corn futures were 2.6% lower Wednesday to $3.415 per bushel and were down 22.9% since its June 17 high.
Weighing on the corn market, Joel Widenor, vice president at Commodity Weather Group, said the southern third of the Midwest experienced rains in the past four days while northern areas are expected to see precipitation before the weekend, which should help maintain adequate soil moisture for crops, Bloomberg reports.
This is a sharp reversal from the previous month when concerns over dry and hot weather pushed corn futures into a bull market.
“Rain this weekend provided timely relief,” Joe Camp, a risk management specialist at Bloomington, told Bloomberg. “It is increasingly likely we will produce good crops. Demand will need to improve on this break to stabilize prices.”[related_stories]
The improved weather outlook is also raising projections for production as crops enter the pollination period.
“We’re going into pollination for corn without a lot of stress,” Bill Gentry, a marketing consultant at Risk Management Commodities, told Bloomberg. “The funds kind of came into the market hoping for a real weather spook, and it’s dissipated.”
Moreover, U.S. government data revealed growers sowed the third-largest corn crop since World War II in June, raising the prospects of a large harvest ahead.
Related: Corn ETF Looks to Breakout
“Additional price weakness followed last week’s USDA reports that showed larger-than-expected June 1 stocks of U.S. corn and a larger-than-expected estimate of planted acreage of corn,” University of Illinois agricultural economist Darrel Good told AgWeek. “June 1 corn stocks were estimated at 4.722 billion bushels, about 195 million bushels larger than the average trade guess. Trade guesses were surprisingly small, averaging about 100 million bushels less than our calculation that assumed that feed and residual use of corn during the third quarter of the marketing year was on track for the marketing-year total to reach the USDA projection of 5.25 billion bushels.”
For more information on the corn market, visit our corn category.
Teucrium Corn Fund