Corn rarely makes the front pages, yet it sits underneath an enormous amount of what the world eats and burns. It feeds livestock, sweetens soft drinks and is turned into fuel. That makes corn prices a quiet but important input into food inflation, farm incomes and even the cost of driving. Here is what moves the market.
What corn is used for
Most of the world’s corn, also known as maize, is not eaten directly by people. The biggest single use is animal feed for cattle, pigs and poultry, so corn prices feed through into the cost of meat, milk and eggs. In the United States, a large share is also turned into ethanol, which is blended into petrol. The rest goes into food products, sweeteners, starch and exports.
The United States is the largest producer and exporter, followed by countries such as Brazil, Argentina and Ukraine. China is a major consumer and, in some years, a large importer.
Where it trades
The benchmark price is set by corn futures on the Chicago Board of Trade, part of CME Group, quoted in US cents per bushel. A bushel of corn weighs about 25 kilograms. Traders, farmers, feed companies and food manufacturers all use these contracts to lock in prices or speculate on moves.
Supply: planting, weather and harvest
Supply drives much of the volatility. In the US, farmers decide in spring how many acres to plant with corn rather than alternatives such as soybeans, depending on expected prices and costs. Planting runs through April and May, the crop is most sensitive to heat and dryness during pollination in July, and harvest runs through the autumn.
Weather is the big wild card. A hot, dry spell in the US Midwest at the wrong moment can cut yields sharply and send prices higher. Good rains can do the opposite. South American harvests add a second season of supply risk during the northern winter.
The USDA reports
The US Department of Agriculture publishes regular reports that move prices. The monthly World Agricultural Supply and Demand Estimates, known as WASDE, set out forecasts for production, use and stocks. The Prospective Plantings report at the end of March and the Acreage report at the end of June show how much land farmers intend to plant and have planted. Quarterly stocks reports show how much grain is in storage. Surprises in any of these can move prices sharply on the day.
Demand: feed, fuel and exports
On the demand side, the size of global livestock herds matters, as does the profitability of ethanol production, which rises and falls with petrol prices and blending rules. That creates a link between corn and oil: when energy prices climb, ethanol becomes more attractive, which can support corn demand. Our guide to Brent crude covers the oil side.
Export demand, especially from China and Mexico, is closely watched. Trade disputes and tariffs can quickly change who buys American corn and at what price.
The dollar and input costs
Because corn is priced in dollars, a stronger dollar makes US exports more expensive for overseas buyers, which can weigh on prices. Farmers’ costs matter too. Fertiliser, much of which is made using natural gas, is a big expense, so a spike in gas prices can raise the cost of growing corn and affect planting decisions. Our explainer on what moves wheat prices covers a similar mix of forces.
Risks for traders
Grain markets can be calm for weeks and then move violently on a weather forecast or a USDA number. Futures carry leverage, and exchanges set daily price limits that can leave traders unable to exit on very volatile days. Seasonal patterns exist, but they are not reliable enough to trade blindly.
The bottom line
Corn prices come down to a tug of war between weather-driven supply and demand from feed, fuel and exports, with the dollar and energy costs in the background. Knowing the calendar of planting, harvest and USDA reports helps you understand why the market moves when it does. If you want a clear view of how ready you are to trade fast-moving markets like this, take the free Samuel & Co Trading Trader Assessment.
