Commodities & Metals

Corn is All the Rage Again (CF, POT, MOS, AGU, MON, SYT, IPI, CORN)

Warmer and drier weather in the US Midwest is raising concerns about the corn and soybean crops. If such weather continues, it could reduce the harvest and drive crop prices up. Corn prices fell to an 12-month low in early June, but have jumped more than $0.60/bushel since then.

Adding to the bad news is a forecast that US corn stockpiles will reach a 16-year low this summer. Before the unusually hot and dry weather became a factor, the US Department of Agriculture was expecting a record harvest for this year and doubling of US stockpiles by next year. That prediction is now in jeopardy, and corn prices keep rising.

Aside from raising commodity prices, though, a weak harvest typically means that fertilizer company stocks get a boost. CF Industries Holdings Inc. (NYSE: CF) is up more than 4.75% today, Potash Corp. of Saskatchewan Inc. (NYSE: POT) is up 5.3%, The Mosaic Co. (NYSE: MOS) is up 4.4%, Agrium Inc. (NYSE: AGU) is up about 4.3%, and Syngenta AG (NYSE: SYT) is up 3.8%.

Other fertilizer makers including Monsanto Co. (NYSE: MON) and Intrepid Potash Inc. (NYSE: IPI) are up around 2%, but trail the others for different reasons. Monsanto’s fertilizer business does not drive the company, and Intrepid is still too illiquid.

The Teucrium Corn Fund (AMEX: CORN) is also up about 4% today, at $38.52 in a 52-week range of $35.23-$50.69.

Paul Ausick