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Commodities are seeing a huge boom this year. While the shine of gold and silver is waning, energy and industrial metals are currently red hot on hopes of speedy economic recovery that will lift the demand for commodities. Agricultural commodities are also not behind with corn seeing strength on China’s buying binge (read: 3 Reasons Why Commodities ETFs May Rally in 2021).
This is especially true as Teucrium Corn Fund (CORN - Free Report) has gained 10.2% so far this year. The latest rally came on the back of twin upbeat data — one on corn exports to China and the other on weekly export inspections. The latest data from the U.S. Department of Agriculture (“USDA”) revealed that U.S. corn sales to China reached the highest since January, totaling 1.156 million tons. Meanwhile, weekly export inspections climbed to 2.204 million tons from 1.673 million tons in the prior week and represent the highest level in at least 26 years.
China’s corn buying is expected to pick up this year on high domestic prices, the need to restock grain reserves, and growth in feed consumption. The USDA projects that China will import 24 million tons tons of corn globally in the 2020-21 (October-September) marketing year, more than triple a year earlier. In addition, it will buy other feed grains including barley, sorghum and wheat, as the country strives to rebuild its massive hog herd that has been hit by diseases. Notably, China purchased 18.7 million tons of U.S. corn through Mar 4 (read: Can China ETFs Shine Bright on Solid Economic Data?).
Additionally, a threat from armyworm, which attacks corn among other crops, in China will result in higher corn exports from United States. Further, strong demand from the refining industry will also ramp up China’s buying, pushing the corn price higher. One U.S.-based source told Agricensus “Processors are bidding for cash corn in the US, which means their prices are going to go higher,” with the heavy export program now a key element in driving domestic prices higher.
Moreover, demand for corn will continue to rise exponentially due to world population growth and expansion of the global middle class. Coming to supply side, the USDA projects corn production at 15.2 billion bushels (bb) for the 2021-22 season with corn plantings at 92 million acres.
CORN in Focus
This ETF provides investors unleveraged direct exposure to corn without the need for a futures account and thus reduces the effects of both contango and backwardation. It uses three futures contracts for corn, all of which are traded on the CBOT Futures Exchange. The three contracts include the second-to-expire contract, weighted 35%; the third-to-expire contract, weighted 30%; and the contract expiring in the December following the expiration month of the third-to-expire contract, weighted 35%. The fund does not track the spot price of corn (see: all the Agricultural ETFs here).
CORN has accumulated $169 million and trades in average daily volume of 377,000 shares. It has 2.47% in expense ratio and has a Zacks ETF Rank #5 (Strong Sell) with a High risk outlook.
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Corn ETF in Focus on China's Buying Spree
Commodities are seeing a huge boom this year. While the shine of gold and silver is waning, energy and industrial metals are currently red hot on hopes of speedy economic recovery that will lift the demand for commodities. Agricultural commodities are also not behind with corn seeing strength on China’s buying binge (read: 3 Reasons Why Commodities ETFs May Rally in 2021).
This is especially true as Teucrium Corn Fund (CORN - Free Report) has gained 10.2% so far this year. The latest rally came on the back of twin upbeat data — one on corn exports to China and the other on weekly export inspections. The latest data from the U.S. Department of Agriculture (“USDA”) revealed that U.S. corn sales to China reached the highest since January, totaling 1.156 million tons. Meanwhile, weekly export inspections climbed to 2.204 million tons from 1.673 million tons in the prior week and represent the highest level in at least 26 years.
China’s corn buying is expected to pick up this year on high domestic prices, the need to restock grain reserves, and growth in feed consumption. The USDA projects that China will import 24 million tons tons of corn globally in the 2020-21 (October-September) marketing year, more than triple a year earlier. In addition, it will buy other feed grains including barley, sorghum and wheat, as the country strives to rebuild its massive hog herd that has been hit by diseases. Notably, China purchased 18.7 million tons of U.S. corn through Mar 4 (read: Can China ETFs Shine Bright on Solid Economic Data?).
Additionally, a threat from armyworm, which attacks corn among other crops, in China will result in higher corn exports from United States. Further, strong demand from the refining industry will also ramp up China’s buying, pushing the corn price higher. One U.S.-based source told Agricensus “Processors are bidding for cash corn in the US, which means their prices are going to go higher,” with the heavy export program now a key element in driving domestic prices higher.
Moreover, demand for corn will continue to rise exponentially due to world population growth and expansion of the global middle class. Coming to supply side, the USDA projects corn production at 15.2 billion bushels (bb) for the 2021-22 season with corn plantings at 92 million acres.
CORN in Focus
This ETF provides investors unleveraged direct exposure to corn without the need for a futures account and thus reduces the effects of both contango and backwardation. It uses three futures contracts for corn, all of which are traded on the CBOT Futures Exchange. The three contracts include the second-to-expire contract, weighted 35%; the third-to-expire contract, weighted 30%; and the contract expiring in the December following the expiration month of the third-to-expire contract, weighted 35%. The fund does not track the spot price of corn (see: all the Agricultural ETFs here).
CORN has accumulated $169 million and trades in average daily volume of 377,000 shares. It has 2.47% in expense ratio and has a Zacks ETF Rank #5 (Strong Sell) with a High risk outlook.
Want key ETF info delivered straight to your inbox?
Zacks’ free Fund Newsletter will brief you on top news and analysis, as well as top-performing ETFs, each week. Get it free >>