Corn Prices Explained

As you can see corn prices are fluctuating. But why is that? And is there a way to predict the price of corn?

Why are corn prices fluctuating?

Corn prices are becoming volatile in the market recently. Several factors are to be considered but here are the top reasons:

1. Weather Conditions

The agriculture sector suffers the most when a natural disaster happens. 

Drought, extreme weather temperatures, and floods can impact crop productivity eventually causing production shortages and price increases.

The US, the leading corn producer in the world recorded its low corn production at 353 million tons in October 2022. The lack of rain from the Ohio River Valley significantly lowered the water level of the Mississippi river, the waterway system that provides most of the US agricultural produce.

2. Currency Exchange Rates

The current inflation rate plays a major part in corn price variation. 

Corn is often traded in dollars so its’ value depends on the US economy’s performance. If the dollar rate strengthens against other currencies this will lead to expensive corn purchasing. This will prompt buyers to find corn alternatives from other countries resulting in low corn demand.

3. Demand

Corn is the main energy ingredient for livestock feed and ethanol production. Processed corn is also used in baking, beverage, and industrial alcohol. 

Demand changes in any of these products affect the price of corn. For example, the high demand for ethanol will tend to rise the price of corn to keep up production.

4. Market Competition

The global inflation rate largely benefits other corn markets like Brazil as it can leverage its low currency stand against the high US dollar. 

Brazil’s corn export weakened the US market by reaching 6 million tons of corn export on November 2021 according to experts. This led to low corn demand and price in the US.

Which variables impact the price of corn?

• Supply and Demand
• Global Economic Condition
• Government Policies
• Ethanol Production
• Currency Exchange Rates
• Weather Conditions

Where does corn come from?

Corn or maize is believed to be cultivated around 9,000 years ago in Mexico, its place of origin. The Native Americans planted, spread, and modified corn varieties across the US. Its corn plantation and production are located in Ohio, the largest state corn producer.

Today, corn is grown across the world with the US as the top producer and exporter followed closely by China, Brazil, Mexico, and Argentina. Apart from being a food source, ethanol uses 40% of US corn produce for its production.

When is the corn season?

Corn is a warm-weather crop thus, speaks for its growth condition preference. In the US, the corn season starts from spring to summer or early fall.

March, April, and May are the planting, cultivating, and growing seasons. Late July, August, and early September are the harvesting seasons.

It is equally important to note that growing and harvesting seasons depend on a certain country’s climate and agricultural practices. Lastly, corn types have different growing patterns.

For instance, sweet corn has a short growing season compared to other types of corn like white corn which is available year-round.