The corn exchange traded fund surged in June through July on the worst drought in half a century, but optimistic traders are looking for rain on the horizon. Still, as the remnants of Hurricane Isaac move inland, others believe the much needed rains have come a little too late and may even do more harm than good.
The Teucrium Corn Fund (CORN) has jumped 43.0% over the past three months, but the corn ETF has remained relatively flat over August.
Corn prices kept steady as traders were reluctant to add new positions ahead of forecasts for heavy rains over Labor Day weekend, reports Mark Weinraub for Reuters.
"They do not know how much damage the heavy rains may cause," Mike Zuzolo, president of Global Commodity Analytics & Consulting, said in the Reuters article. "The trade is taking a cautious approach ahead of the remnants of (Hurricane) Isaac."
Heavy rains would delay harvests and even harm crops as they near maturity. Additionally, the high winds could knock down corn stalks, which have been weakened during the drought.
"I don't want the wind," Kenneth Metcalf, a 75-year-old farmer with nearly 600 acres of corn in Illinois, said in a Washington Post article. "This corn is not at all that stable to start with, and we don't need 50- or 60-mile-per-hour winds. It would just break the stalks off."
"The deficits are so great that it will take up to 10 or 15 inches of rain over a longer period of time to replenish soil moisture supplies," Andy Karst, meteorologist for World Weather Inc., said in the Reuters article.
Teucrium Corn Fund
Max Chen contributed to this article.