A bumper crop year across the U.S. agricultural belt will keep soft commodity exchange traded fund prices depressed.
Year-to-date, the Teucrium Corn Fund (CORN) has declined 14.9% and Teucrium Soybean Fund (SOYB) fell 4.7%. Meanwhile, the PowerShares DB Agriculture Fund (DBA) , which tracks a group of agricultural commodity futures, including corn 9.4% and soybeans 10.7%, is up 6.7% so far this year. [Navigating an Uneven Market for Commodities ETFs]
Inspections across Ohio to Nebraska show corn output in the U.S., the world’s largest producer, could be 1% above government estimates and soybean output could be 1% higher, Bloomberg reports
The ideal weather conditions helped corn stalks produce more kernels than normal and increased seed pod growth in green soy plants.
The outlook for a bumper crop year has already sent Chicago futures into a bear market last month. CORN is down 26.2% since its April 29 high and SOYB is 17.2% lower from its May 22 high.
CBOT corn futures now trade around $3.72 per bushel and CBOT soybean futures are hovering around $10.43 per bushel.
The government has already predicted record crops and believes exports will drop – Russian counter sanctions against Western countries will diminish overseas demand.
Some are worried about where all the new harvested crop will be placed. On top of the leftover reserves from last year’s high crop yield, grain production will bolster 2014 supply to 26.97 billion bushels, according to the USDA, compared to 23.4 billion of storage as of Dec. 1, 2013.
“I don’t know where it will all go this year,” Richard Guse, a 54-year-old farmer from Waseca, Minnesota, said in the article. “We need better roads and faster train shipping to keep the grain moving.”
Teucrium Corn Fund
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