ETFs that track corn got creamed today after the U.S. Department of Agriculture shocked the market with reports of larger-than-expected supplies and an increased forecast for the fall harvest.
The Teucrium Corn Fund (CORN) tumbled 8.7% to $40.50 and the iPath DJ-UBS Grains SubIndex Total Return ETN (JJG) sank 7.4% to $46.23 after federal regulators reported the number of acres planted this spring rose 5% to 92.3 million acres, the second highest planting since 1944.
This far exceeded analyst expectations of 90.7 million bushels as did the report that U.S. corn inventories as of June 1 fell 15% to 3.67 billion bushels instead of declining 23%. In early June corn prices rallied on expectations that the market would see shortages by the end of the summer.
The Teucrium Corn Fund is a commodity pool that holds three futures contracts, the second-to-expire CBOT Corn Futures Contract, weighted 35%; the third-to-expire CBOT Corn Futures Contract, weighted 30%; and the CBOT Corn Futures Contract that expires in the December following the expiration month of the third-to-expire contract, weighted 35%. The fund charges the exceptionally high expense ratio of 1.49%.
The iPath is an exchange-traded note, a debt instrument that doesn’t hold any assets. The Dow Jones-UBS Grains Subindex Total Return reflects the returns of three grains futures contracts.