How to invest in corn in 2023
This page teaches you everything you need to know before investing in corn. We dig into the reasons you should invest in it, offer a step-by-step guide on how to invest, and explain what might make corn a good choice for you.
Where can I invest in corn online?
If you want to invest in corn, you’ll first need to register with a broker. Our commodity experts have selected the best platforms that offer corn investing below. Click through the links to get started right away, or continue scrolling to learn more about how to invest.
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Why invest in corn?
There are many reasons why putting money into the corn market can make a good investment. The primary reason many people invest in corn and commodities is to hedge against inflation. Below we’ve highlighted and explained some other motivations for investing in corn.
- Hedge against inflation. Inflation is a risk all investors face, and investing in corn is one way to ‘hedge’ or protect against it. Inflation is when money loses value over time and if inflation rates rise, agricultural commodities, such as corn will likely increase in price too.
- Diversify your portfolio. Some investors diversify their portfolios by investing in different companies, sectors, or geographies. Investing in commodities like corn offers a different approach to diversification. Corn is used worldwide in many different ways, and adding it can add safety to your portfolio for when other sectors are underperforming.
- Ethanol demand. Ethanol is produced through the fermentation of agricultural products and corn is often used as part of that production. Ethanol has many uses, including transportation fuel and manufacturing. One way to speculate on the rising demand for ethanol is by investing in corn.
5 top tips for investing in corn
Investing in corn is a simple process and below we’ve highlighted the steps you need to follow in order to start right away.
- Decide on an investment strategy. The first step you’ll want to take is to decide how you will invest. Are you going to be passively or actively investing? It will also be helpful to determine how much risk you want to take on.
- Do your research. Next, you’ll need to conduct well-balanced research into the corn market while also deciding how you plan to invest in it. Further down this page, we have explained the many different ways to invest in corn.
- Set a budget. You may already have decided how much you want to risk and it’s wise to set a budget and stick to it. It goes without saying never to risk more than you can afford to lose.
- Choose between the long term and short term. Depending on your goals, you may take a longer-term or shorter-term view of your corn investment. If you’re investing for the short term, it would be wise to conduct technical analysis, while a longer-term outlook would be helped by fundamental analysis.
- Find an investment platform. Not all brokers will offer corn investing to their clients, so it’s vital to check with yours if they do. Our experts have also selected some of the top-rated platforms around offering the corn market, which you can see by clicking the button below.
Ways to invest in corn
There are a number of different ways to invest in corn and the right approach depends on a few factors, like your budget and experience. Below we’ve listed the best ways to invest in corn and explained the benefits of each.
Invest in corn stocks
There are no companies listed on the stock market that are pure play investments in corn. However, there are lots of ways to invest in stocks to gain exposure to it. Buying shares in farming companies that produce corn among other things is one way. You can also invest in agribusinesses which provide seeds, fertilisers, and the machinery used in corn farming.
Invest in corn ETFs
Exchange-traded funds that track the performance of corn or the agricultural sector are often the easiest way for beginners to get involved. Some ETFs track the futures price of corn, giving investors easy and cheaper access to pure play corn futures.
Invest in corn mutual funds
Mutual funds are like ETFs and investors can buy shares in them. However, unlike ETFs, they are managed funds, where a professional fund manager buys and sells shares in companies according to their own expertise. You are able to find funds which have a focus on the agricultural sector which will give exposure to the corn market.
Invest in corn futures
One of the most common ways to speculate on short term price changes is by using futures contracts. They are simply an agreement to make a trade in the future at a pre-agreed price. Corn futures contracts require an in-depth understanding of what impacts the market and are best suited to experienced investors.
How does the corn market work?
It works in a similar way to most other markets with supply and demand largely contributing to its price. There are a number of other factors that affect its supply and demand as well, and we’ve highlighted the main ones in the bullet points below:
- Ethanol prices. Corn plays a big part in the production of ethanol and demand for it will often impact the price of corn. If worldwide requirements for ethanol were to drop, for example, then there would be a surplus of corn. Its supply would outweigh its demand and its price would lose value.
- Weather. Changes in weather are often correlated with corn and other grains crop outputs. Extreme heat and too much rain can both reduce crop yields, which in turn will likely impact the price of corn. If farmers are unable to produce the required amounts of corn, supply would be short and prices would rise.
- The Chinese market. Recent years have seen China increase their bio-fuel consumption. Growing wealth levels in the country has meant more corn is needed to feed a larger number of livestock used for meat. Both of these factors are geared towards greater demand and rising corn prices.
- US Dollar. The United States is the largest producer of corn in the world and the value of its currency can affect the price of corn. A fall in value of the dollar would mean foreign buyers would pay more for U.S. corn, while it would become cheaper if there was a rise in the dollar’s value.
When should you invest in corn?
One of the most opportune times is when inflation is rising. As we mentioned earlier on this page, investing in corn is often used as a hedge against inflation. If inflation rates are creeping higher, buying commodities such as corn would likely be a good decision.
In the section above we have discussed a few factors that affect the corn market and keeping up to date with them would help with timing your investment into corn. For example, if the weather in parts of the world where corn is grown has been particularly bad, then buying corn could make for a good investment.
Is corn a good investment in 2023?
It could be, but there are some things to consider before making a decision. A lot of what we have covered in this page will impact the price of corn this year. Ethanol demand continues to rise, especially in China where a shift towards biofuels has seen corn prices rising. It’s also important to keep an eye on worldwide inflation figures which will also help you make a decision on when to buy.
What should I do now?
If you’re ready to make your first investment into corn, then registering with a broker that offers the market is a good idea. You can also check out our learn hub, where you can find courses on the stock market, currencies, and crypto. Alternatively, if you want to learn how to trade corn, you can check out our page here and read our expert analysis below.
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