Corn

Corn is the most widely grown grain in the United States and one of the most actively traded agricultural futures in the world. It feeds livestock, is turned into ethanol fuel, sweeteners and starches, and is exported around the globe. The US is the largest producer and a leading exporter, followed by Brazil, Argentina and Ukraine as major exporters, while China is a huge producer and consumer. Corn prices respond to weather, acreage decisions, energy policy and global trade.

The contract#

A 10 cent move in corn is $500 per contract. See Tick Size and Tick Value.

Demand#

Approximate recent shares from USDA data; they vary by year. US ethanol mandates under the Renewable Fuel Standard tie corn demand to energy policy and gasoline consumption.

The crop calendar#

See Seasonality in Commodities.

What moves corn prices#

• US weather during planting, pollination and grain fill.
• South American crops: Brazil's second crop ("safrinha") corn has become a major export source.
• USDA reports: WASDE, Acreage, Grain Stocks and Crop Progress. See Agricultural Markets.
• Ethanol demand and energy prices. See Crude Oil.
• Export demand, especially from Mexico, Japan, China and others.
• The US dollar and competing exporters' currencies.
• Stocks to use ratio: low ratios are associated with high prices.

Corn and other markets#

• Soybeans: farmers choose between corn and soybeans for their acres; the soybean to corn price ratio influences planting decisions. A ratio above about 2.3 to 2.5 has tended to favour soybeans. See Soybeans.
• Wheat: corn and wheat can substitute in animal feed. See Wheat.
• Livestock: feed costs affect cattle and hog production.

Trading corn#

• Outright futures and options, including weekly options during the growing season.
• Calendar spreads such as July versus December, old crop versus new crop. See Calendar Spreads in Futures.
• Inter commodity spreads with soybeans and wheat.
• Weather based trading using forecasts and crop condition data.

Risks#

• Weather shocks and limit moves.
• Report surprises from USDA.
• Policy changes in ethanol mandates or trade relations.

Frequently asked questions#

What is corn used for?#

Mainly animal feed, ethanol fuel, exports and food and industrial products such as sweeteners and starch.

When is corn most volatile?#

Often during the summer growing season, especially in July around pollination, and around major USDA reports.

What is the soybean to corn ratio?#

The price of soybeans divided by the price of corn, which influences how many acres farmers plant of each crop.

Next, learn about the world's most traded food grain in Wheat.