The last gasp of summer has been a boon for corn and soybean prices thus far. Prices for both agricultural commodities have been ticking higher, stemming from harsh weather amid a heatwave in various parts of the globe.
Bloomberg reported that corn futures have been on the move for its second week in a row thanks to a cut in U.S. crops as well as dry weather plaguing European farmers. That same arid climate has been extending itself to places like Mexico and Ukraine, hurting production for yields in coarse grain, as reported by the United Nations Food and Agriculture Organization.
If this trend persists, investors may want to get exposure with 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.
Heat Also Affecting Soybeans
Those looking at corn may also want to take a closer look at soybeans. Record heat could add some upticks for soybean prices, which have fallen more than 20% for the year.
If that’s the case, take a look at the Teucrium Soybean Fund (SOYB ). It provides similar exposure to what investors could obtain by trading in soybean futures contracts. Long-term buy-and-hold investors who want to diversify their current portfolios with commodity exposure may opt to buy the current dip in prices. Likewise, short-term traders can also buy the dip if they expect prices to tick higher.
“With the recent heat, the notion of a record soybean crop is now in question,” reported Farm Progress. “The market had been pricing in 53.2 bushels per acre for yield according to the August USDA WASDE report. Also, trade had already been pricing in a large U.S. soybean carryout number of 560 million bushels. The market knows there is a big crop out there, but potentially not as large as previously anticipated.”
It’s certainly been a challenge for ag commodities markets on all levels, including consumer, investors, and farmers. For the latter, many are opting to delay capital investments to churn a profit in the challenging environment — climate-wise and economically.
“Corn and soybean prices have fallen since 2021 and 2022, while the costs of farm essentials remain stubbornly high,” reported Global Trade Magazine. “Combine the two, and farmer operating margins are being eaten away at an uncomfortable rate.”
For more news, information, and analysis, visit the Commodities Channel.
