A beginner’s guide to corn: Price, uses & market overview

Explore a thorough overview of the corn market, learn how it works in simple terms and get to grips with its significance as a popular global commodity.
By:
Updated: Nov 27, 2023
Listen

On this page, we explore everything you need to know about corn. Gain insights into corn market trends, pricing mechanisms, and the environmental impact of corn. 

Read on to learn more about this popular commodity and find links to beginner friendly guides explaining how you can get involved in corn. 

What is corn?

Copy link to section

Corn is a grain that has been used as food for humans and livestock for thousands of years. Also known as maize, it’s a key ingredient in hundreds of different food types, cooking oils, and is increasingly being used to create environmentally friendly biofuels.

Its central place in society is what gives corn its value. Even in a globalised world with many different sources of food, a shortage of grain can lead to food shortages. As biofuels start to make up a bigger percentage of overall fuel consumption, the importance of grains like corn is going to grow even further.

The price of corn constantly fluctuates and the biggest impact comes from the supply side, where bad weather or poor harvests can cause shortages that push the price up. Expectations – of good or bad harvests – can also have an influence as corn is often traded a few months in advance of it actually coming onto the market.

The demand for grain comes from all over the world, but can be particularly acute in emerging markets in Asia. Similarly, growth in the renewable energy sector can also increase demand and send the price up.

Corn market overview

Copy link to section

The corn futures market traces back to the 19th century when the Chicago Board of Trade sought to create price stability for farmers and buyers. Today, corn is one of the most widely traded grains in the world. The United States dominates production and exports nearly a third of its crops to countries like Japan, Mexico, and Colombia. 

Corn futures contracts are traded on the CBOT and other global exchanges. Prices are impacted by weather, biofuel policies, and oil prices. Like other commodities, the price of corn can fluctuate greatly and in the past few years alone has seen a 150% rise followed by a 50% loss. 

While speculators have influenced extreme price spikes and volatility, corn futures markets have brought general price assurance to producers, users and crop-dependent economies over the long run. 

Is corn valuable? 

Copy link to section

Yes, corn is a valuable commodity and there are numerous reasons why investors are attracted to the market. We have highlighted some of these key fundamentals below, explaining what they are and why they matter.

  • 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.

How to invest in corn

Copy link to section

You can invest in corn by using a commodity trading platform. These platforms offer a range of commodities and are very easy to use. There are different platforms suitable for specific requirements. 

Some let you buy corn, others let you trade corn, and many are designed for investing in the grain. Visit our dedicated guide to discover how to invest in corn.

Corn in your investment portfolio

Copy link to section

A diverse investment portfolio can help protect you during market uncertainty, and the inclusion of corn can add value while allowing you to spread your money across various markets. 

Corn often moves independently to traditional investments like stocks and bonds. You can include corn in your portfolio as a hedge against potential losses. During times of economic uncertainty, investors view commodity grains such as corn as attractive options. 

Corn’s long history and the fact it is a versatile grain with multiple uses makes it a good long term play.

Corn vs other commodities

Copy link to section

Corn is an agricultural commodity and is part of the grains family, including wheat, canola, and rice. Each commodity is unique in its own way and offers different features for investors and traders. You can learn more about specific precious metals using our dedicated guides below. 

  • Wheat. Wheat is a grain that is grown around the world and is used for various foods. 
  • Corn. Corn is one of the most versatile commodities with many uses, including livestock feed, biofuel, oil, and food. 
  • Soybean. Soybean is a major global commodity used for livestock feed and cooking 

FAQs

Copy link to section
What is the market for corn?
Where does the UK get its corn?
Where does the United States get its corn?
What is the corn outlook for 2024?

Risk disclaimer
Prash Raval
Financial Writer
Prash is a financial writer for Invezz covering FX, the stock market and investing. For over a decade he has traded spot FX full time while... read more.