Market Overview

Commodity Funds Continue To Struggle

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Commodity Funds Continue To Struggle

The price of a bushel of corn for May delivery tumbled during the last day of the quarter by almost 5 percent to $3.756. The move was caused by the corn supply in the Unites States coming in much higher than expected, even after the government pegged its inventory in June at its highest level in 28 years.

The 7.75 billion bushels' stockpile, as of March 1, is 11 percent higher than a year ago, according to the U.S. Department of Agriculture. The reading outpaced economists' estimates of an 8.6 percent increase and is the highest on record at this date since 1987.

Corn is used in everything from animal feed to fuel. Price changes affect ethanol producers such as Archer Daniels Midland Company (NYSE: ADM), and meat producers like Tyson Foods, Inc. (NYSE: TSN) could be in for a treat going forward, as operating costs will likely be lower.

Related Link: American Spending Is Good News For ETFs

With farmers planning on planting a record number of corn for the remainder of 2015, it does not appear supply will be falling at any time soon. The supply glut has caused future prices for corn to fall by 25 percent over the last 12 months.

Other Commodities

Soybean inventories have had a similar story, as they were pegged by the government on March 1 at 1.334 billion bushels – up more than 900 million a year prior. In Chicago, soybean futures rose 0.6 percent to $9.73 a bushel on the news of a lower than expected supply.

In addition to corn and soybean, wheat inventories on March 1 also rose to 1.124 billion bushels from 1.057 billion a year earlier, the USDA said. Analysts expected 1.141 billion, on average.

Highlighted below are a corn, wheat and soybean ETNs that have been affected by the supply glut.

Teucrium Corn Fund

The Teucrium Corn Fund (NYSE: CORN) aims to provide investors with exposure to the price of corn and accurately reflect the average change in the three main future contracts for corn. Over the last 12 months, CORN is down 29 percent and down 9 percent over the last six months. The fund has an expense ratio of 2.75 percent.

Related Link: Wheat Higher

Teucrium Wheat Fund

The Teucrium Wheat Fund (NYSE: WEAT) tracks wheat future contracts and aims to accurately reflect its price within the fund. WEAT is down 32 percent over the last 12 months and up 4 percent over the last six months. The fund has an expense ratio of 3.74 percent.

Teucrium Soybean Fund

The Teucrium Soybean Fund (NYSE: SOYB) follows the three main future contracts associated with soybeans. The fund is down 20 percent over the last 12 months and up 3 percent over the last six months. The fund has an expense ratio of 1.99 percent.

 

Related Articles (CORN + WEAT)

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