The investment objective of the Fund is to have the daily changes in percentage terms of the Shares’ net asset value (“NAV”) reflect the daily changes in percentage terms of a weighted average of the closing settlement prices for three futures contracts for corn (“Corn Futures Contracts”) that are traded on the Chicago Board of Trade (“CBOT”), specifically (1) the second-to-expire CBOT Corn Futures Contract, weighted 35%, (2) the third-to-expire CBOT Corn Futures Contract, weighted 30%, and (3) the CBOT Corn Futures Contract expiring in the December following the expiration month of the third-to-expire contract, weighted 35%, less the Fund’s expenses. (This weighted average of the three referenced Corn Futures Contracts is referred to herein as the “Benchmark,” and the three Corn Futures Contracts that at any given time make up the Benchmark are referred to herein as the “Benchmark Component Futures Contracts.
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Corn slides to 3-year low after bearish stocks data
Corn (CORN -2.4%) and Soybeans (SOYB -3.2%) tumble - with corn hitting a 3-year low - after the USDA reports estimated corn stocks of 824M bushels, off 17% from a year ago, but far higher than trade estimates for 687M. Bean stocks are estimated at 141M bushels, also off 17% from a year ago, but 13% above estimates. Stocks still remain low, but these are old crop numbers, and forecasters are looking forward to a big crop this fall.
Wheat (WEAT -2.7%) stocks of 1.85B bushels were slightly below expectations.
Lower-than-expected feed usage and export demand were behind the big corn number - high prices had pig farmers substituting corn for wheat.
Corn slides as USDA ups production and ending stocks
December Corn slides nearly 3% after the USDA revises upward its estimate for ending stocks to 1.855B bushels from last month's 1.837B. Trade forecasts were for 1.739B. Production is lifted to 13.843B bushels from 13.763B last month and trade estimates of 13.641B. The average yield is expected at 155.3 bushels/acre vs. 123.4 last year.
Beans go green, however, as the USDA cuts it estimate for yields across the Midwest. The agency sees production at 3.149B bushels and ending stocks of 150M after cutting export demand by 20M bushels. "Leaves trade nervous," tweets Arlan Suderman of Water Street Solutions. "USDA too conservative on demand."
Wheat's reverses an early loss to go flat even as the USDA revises higher its forecast of ending stocks to 561M bushels from 551M.
Deere (DE -1.1%) got knee-jerked for a few cents on the news release, but looks to be in the process of bouncing back.
Corn (CORN -1.8%) gives up early gains and turns sharply lower after the USDA estimates 2013/14 ending stocks of 151.8M tons, above the trade estimate of 149.6M. The USDA cut its yield projection by 1.5 bushels to 156.5 bushels/acre, but lower feed usage and no reduction in planted acreage (despite spring delays) has stocks higher. Tyson (TSN +0.9%) and Pilgrim's Pride (PPC +1.9%) cheer the news. The data was bearish for beans (SOYB -1.8%) as well. Grains ETF (JJG -1.3%).
Goldman's Tuesday bear call on agricultural commodities has implications for Deere (DE -2.7%) which gets a downgrade to Sell from Neutral. Analyst Jerry Revich says "recovering commodity inventories point to lower U.S. farm income and capex." As recently bearishBarron's notes (channeling Wells Fargo's Andrew Casey) "as goes the North American corn crop, so goes DE's stock price." For their part, GS says only a "major weather shock" could keep corn crop (CORN +0.1%) prices "near their current levels." Price target: $85 from $98.
Nearly everyone's a winner today as it's not just stocks lit up bright green. Oil (USO +3.3%), gold (GLD +0.5%), silver (SLV +0.7%), and corn (CORN +1.8%), are all flying. Even bonds (TLT), which tumbled on the big dip in jobless claims, have returned back to flat. Notably lower is natural gas (UNG -6.3%), tumbling on an unexpected add to inventories and as spring finally seems to arrive in the States.
The inaugural midday release of the USDA's January crop report doesn't disappoint, with corn reversing early losses and now sharply green as Dec. 1 stocks come in at 8.03B bushels vs. expectations of 8.21B. Ending stocks are estimated at a slim 602M bushels vs. expectations of 667M. Beans are down after production came in higher than expected. Wheat jumps on lower-than-anticipated planted acres.
Brazil’s government go-ahead for Petrobras (PBR -3.6%) to raise its gasoline prices in early 2013 likely will raise demand for domestically produced sugar-based ethanol, but effects also could reach U.S. shores. Ethanol output in the U.S. is expected fall ~10% next year, and a robust export market could give Brazilian mills even more incentive to produce ethanol instead of sugar.
Grains soar as the USDA lowers its estimate of corn ending stocks to 619M bushels from 733M in September. The cut comes even as it raises its forecast of harvested acres to 360K. What happens, asks Arlan Suderman, if the USDA is forced to cut harvested acres in its next report? Yikes. Corn +4%, Beans +2.1%, Wheat +1.5%.
Corn soars 3% as the USDA announces stocks at just 988M bushels, the low end of the expected range. Prior to the report, corn had tumbled about $1/bushel over the past month. Wheat stocks also came in low, suggesting greater-than-expected feed use for both grains. Bean stocks beat expectations after the USDA "finds" another 38M bushels from last year's crop. Wheat +2%, Beans flat.
Corn tumbles 2% as the USDA lowers its expected crop yield and harvest only marginally from last month's estimates. Also lowered were expected exports - to 1.25B bushels from the already low figure of 1.3B. As a result, new crop ending stocks are now estimated at 733M bushels, up from 650M.
"For the first time in this rally, there is a feel of commercial panic," says a broker after a 2nd day of the Pro Farmer crop tour adds to worries over the security of physical grain supplies (day 1 report here). "You cannot load soybean futures in a ship and send to China (or) feed to chickens and hogs ... panic is in the physical ownership." Price records are falling everywhere. JJG +2.2%.
China plans to release corn and rice from state reserves to cool inflation and ease import needs. The amount isn't yet known, but is estimated to be around 2M tons (the country consumes 10-15M tons monthly). The grains were sharply lower today as traders mostly sell Friday's news of a short crop. Corn -2.2%, Beans -3.1%, Wheat -3.2%.
Off 2.2% today in the wake of a crop report confirming what everybody already knew (a very short crop), corn may also be fading on a rumor the White House could be open to waving the ethanol requirement for fuel.
The USDA's highly anticipated crop report pegs the corn harvest at 10.779B bushels, 150M less then expected. The yield of 123.4 bushels/acre (vs. 127.4 est.) is the lowest since 1995. Ending stocks are pegged at a tiny 650M bushels, down from 1.18B. Traders sell the news, Sept. corn flat now after being a dime higher before the report.