If you’re interested in investing in commodities, the corn trade is a good option to look into. Also known as maize, it’s among the most important crops in the world. It’s part of the staple diet in many parts of the world, so corn isn’t going to lose any value for years to come.
Further, corn also feeds farm animals and is used to make corn syrup that’s in processed foods and beverages. It’s highly adaptable and can even be used as a fuel source for vehicles.
Corn is traded on the following exchanges:
A massive amount of corn is produced annually, almost 525 million metric tons. The leading corn producers are as follows:
The only agricultural commodity that comes close to corn in terms of production is rice and wheat. Although there’s a lot of diverse uses for it, the majority of corn is used to feed livestock.
In the corn trade, the price can be influenced by a number of factors. Things like environmental factors are always there, but you also need to pay attention some reports.
A few times a year, the United States Department of Agriculture (USDA) releases reports that cover every aspect of corn production.
Then there’s the Prospective Plantings report which you have to look out for as it’ll have information about what crops will be planted and its quantity.
Then you have the Grain Stocks report which comes out quarterly with important information about soybeans and grains.
Aside from reports, you also have The North American Free Trade Agreement (NAFTA) which included corn as one of its freely traded products.
So if you want to engage in the corn trade, you have to pay attention to all of this as its value is highly sensitive to the laws of supply and demand. It’s also vulnerable to future shortages as there can be miscalculations in demand.
This is the main factor that can drive a dramatic surge in the price of corn. It happened back in 1996 and it can happen again, only time will tell.