Stronger-Than-Expected Supply Pushing Corn, Soybeans Lower

Stronger-than-expected supply should continue to push corn and soybean prices lower. This may put these commodities in an area of value for traders. Meanwhile, traders might also want to opt for sugar if they’re looking for current commodities strength.

Russia’s occupation of the Black Sea is no longer pushing prices upward as agricultural commodity prices have been trending lower for most of the year. Keeping them afloat has been harsh weather conditions from El Nino climate patterns, which has been creating droughts in certain parts of the globe.

“Competitive Black Sea supplies weighed on prices, though concern over dry weather in Australia and Argentina limited losses,” said U.K.’s Agriculture and Horticulture Development Board analysts, mentioning that a strong U.S. dollar also was a factor for corn and soybean prices.

For plays on corn, traders can consider the Teucrium Corn Fund (CORN). The fund tracks three futures contracts for corn traded on the Chicago Board of Trade. It includes 35% second to expire contracts, 30% third to expire contracts, and 35% December following the third to expire. The various contract exposures help the fund limit the negative effects of rolling contracts, especially during a market in contango.

For traders looking for opportunities in soybeans, consider the Teucrium Soybean Fund (SOYB). It can essentially provide similar exposure to what investors could obtain by trading in soybean futures contracts themselves. This offers short-term traders or longer-term buy-and-hold investors easy ingress regarding soybean price exposure.

Corn, Soybean Prices Lower, But Sugar Likely to Stay High

Commodities traders looking for bullish plays may want to continue sticking with sugar. Supply and demand forces should result in higher prices, which is likely to stay elevated as the world’s top sugar producer, India, will lower its output.

Additionally, with Halloween just around the corner, consumer demand for candy should also provide an additional catalyst for higher sugar prices. According to a Reuters report, French trading group Sucden forecasted that sugar could trade between 22 and 30 cents per pound in in the next year.

“Prices are probably going to stay strong,” said Jeremy Austin, general director of Sucden Brazil.

ETF investors looking to add sugar to their portfolios may want to look at the Teucrium Sugar ETF (CANE). It is the only sugar ETF option available on the market. The fund seeks to have the daily changes in the NAV of the fund’s shares reflect the daily changes in the market for future delivery.

CANE uses a weighted average of the closing settlement prices for three futures contracts for No. 11 Sugar. All three of these trade on the ICE Futures US. The fund seeks to achieve its investment objective by investing under normal market conditions in Benchmark Component Futures Contracts.

For more news, information, and analysis, visit the Commodities Channel.