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How did Russia-Ukraine war affect corn stocks?

Corn jumped to new all-time highs amid Russia - Ukraine war, sending corn stocks higher. Why did it happen?

Background

The escalating confrontation between Russia and Ukraine has caused widespread alarm worldwide. As a result of the political unrest, the economy has been thrown into disarray, affecting a wide range of sectors and marketplaces.

In addition, the fighting has severely hit the agriculture sector, especially grain stockpiles in Ukraine. This post will discuss how the crisis between Russia and Ukraine has affected corn stocks and recommend some good corn stocks and ETFs to invest in.

In 2014, Russia annexed Crimea, a peninsula previously a part of Ukraine, sparking a confrontation between the two countries. Since then, tensions have only increased, with fights persisting in Ukraine’s east to this day. In addition, Russia and Ukraine have suffered economically due to the conflict, with many sectors taking a hit.

Corn stocks and the conflict

Corn stockpiles have been significantly impacted by the conflict between Russia and Ukraine, with prices reflecting the unpredictability of the region. As a result, the war severely damaged Ukraine’s agricultural industry, a key grain exporter. Furthermore, corn output in the nation has dropped due to continuous insecurity, resulting in fewer exports.

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As a result of a drop in output in Ukraine, major corn producers, including the United States, Brazil, and Argentina, have seen an uptick in demand. In light of that, corn prices have risen in response to rising demand, with futures contracts for the commodity setting a new record high in 2021 and 2022.

corn

Corn futures 1W chart, source: tradingview.com

Corn stocks to buy

There are still possibilities for investors to acquire corn stocks despite the present volatility in the grain market caused by the crisis between Russia and Ukraine. Buying individual crop stocks is one strategy for diversifying one’s portfolio. Corn stocks include Archer Daniels Midland (ADM), Bunge Limited (BG), and Cargill, Inc.

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Corn is only one of several agricultural products that Archer Daniels Midland produces and sells throughout the world. As a result, the corporation is positioned favorably to capitalize on the rising demand for grain caused by the war between Russia and Ukraine.

The shares of Bunge Limited are another excellent corn stock option. Corn is only one of several agricultural goods that this industry-leading agribusiness and food corporation manufactures and sells. Increased demand for grain due to the war between Russia and Ukraine is good news for Bunge.

Bunge limited

Bunge limited 1D chart, source: tradingview.com

One of the largest agricultural enterprises in the world, Cargill, Inc. is a privately held company. The business also processes and distributes other agricultural goods, including corn. With the demand for grain expected to rise due to the war between Russia and Ukraine, Cargill is in an excellent position to profit.

Corn ETF stocks

Many exchange-traded funds (ETFs) are available to investors interested in purchasing grain equities. The Teucrium Corn Fund (CORN) is one of the most liquid exchange-traded corn funds. This exchange-traded fund (ETF) follows the price of maize futures, allowing investors to participate in that market.

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The iPath Series B Bloomberg Grains Subindex Total Return ETN (JJG) is another well-known maize ETF. Corn, soybeans, and wheat are all a part of the Bloomberg Grains Subindex that this ETF follows.

The Invesco DB Agriculture Fund (DBA) might be a good option for investors seeking a more diversified agricultural ETF. Corn, soybeans, wheat, and sugar are just some agricultural commodities this exchange-traded fund puts money into.

Final words

The uncertainty in the region caused by the conflict between Russia and Ukraine has significantly affected the grain market, driving up prices. However, corn stocks and ETFs that are positioned to gain from the rising demand for crops might still be purchased by investors despite the present volatility.

Other factors, such as weather, supply and demand, and government policy, all impact the corn market. Therefore, when trading, traders should think about these things. They should also do their own due diligence and own analysis before investing or trading any assets. 

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Finally, investors should be aware of the dangers and possibilities connected with investing in grain stocks and ETFs, because of the influence of the conflict between Russia and Ukraine on the grain market.

Tomáš is a financial reporter with US markets as his main field. Tomáš is an aspiring author and entrepreneur aspiring to help people get better in financial knowledge.

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