Trading Corn

Corn is among the most versatile and complex grains in the world. The United States is the largest producer of corn, and its grain harvest for 2013 was estimated at a record 13.99 billion bushels, where a bushel equals 56 pounds. China and Brazil are the second and third largest producers of the crop.

Corn is a staple commodity worldwide, used for everything from animal feed to corn syrup in processed foods, to corn used for energy sources, and more.

Factors that Can Influence Corn Prices

  • From March through September, prices are strongly influenced by the market’s expectation of supply. The expectations are based on the number of acres planted and the expected yield, based on weather conditions and crop progress, which are reported weekly by the USDA. Expectations can change rapidly, resulting in volatile prices.
  • In an average year, one-third of the United States’ corn crop is diverted to produce biofuel. The EPA (Environmental Protection Agency) of the US, part of a larger energy policy, now demands an increase in the amount of corn used for ethanol. Depending on the corn yield for a specific season, this can drive prices up or down.
  • Unseasonable weather can cause a failure to produce the expected amount of corn, causing a spike in demand and in price. If there is a surplus, the price will drop. Traders should therefore pay close attention to weather conditions and their effect on corn crop yields.
  • Farmers in China, South America, and the Ukraine are now devoting more acres to corn. Traders should consider whether demand will increase to meet this increased supply, and how it will affect prices.

Anyone who wants to trade corn should be aware of the many factors that may influence prices.

Trade Corn