How to trade corn online

By:

James Knight

James is a lead editor for Invezz, where he covers topics from across the financial world, from the stock market, to cryptocurrency, to macroeconomic markets. His ... read more.

Updated: Sep 19, 2023

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This page is an introduction that teaches you the basics of how to trade corn and the things you need to keep an eye on if you want to be successful. Read on to find out how to get started and the platforms you can use to trade.

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How to trade corn online – a step-by-step guide

There are lots of ways to trade commodities, but the basics of how to do it are just the same as trading stocks or cryptocurrencies. Here is a step-by-step guide to help you get started.

1. Find a broker. A broker is the platform through which you buy and trade commodities. There are a lot of them, and each one offers its own unique features. Use the table above to find one that works for you.
2. Create an account. Before you can trade, you need to create an account and get it verified. This is usually a simple process, just be prepared with some contact details and a form of photo ID to hand.
3. Deposit funds. Nearly every broker accepts deposits using bank transfer or a debit or credit card. If you want to fund your account a different way – perhaps using PayPal – you need to check the broker’s website to make sure they accept it first.
4. Decide whether to go long or short. The basic decision you have to make is whether you think the corn price is going to go up (long) or down (short). Then you can start making trades.
5. Execute trade. To trade, you have to find the corn market through your broker platform and then hit ‘buy’ or ‘sell’. Once you’ve made your trade, you now have a position in corn!
6. Set stops and limits (optional). If you don’t have the time to manage your trading account every day, it’s a good idea to set stop-losses and limits. These are essentially pre-arranged trades that execute once the price hits a certain level. They can help you avoid damaging losses and lock in profits.

What is corn? And why does it have value?

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.

What affects the price of corn?

The biggest impact comes from the supply side, where bad weather or poor harvests can cause shortages that push the price up. Expectation – 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.

How has corn performed in recent years?

Its price has been relatively high by historical standards, and has hit two of its highest points ever in the last decade alone. In 2011 and 2012 drought conditions in the US caused a serious supply shortage, while in 2021 demand from China and unexpectedly high rainfall in Brazil caused another surge in price.

In between, it has trundled along at more manageable levels. High corn prices don’t tend to stick around for long. If they get too high, demand shifts to alternative grains – like barley or wheat – and any supply shortage caused by a bad harvest usually only lasts for a few months rather than an extended period.

Should I start trading corn now?

If you’re an experienced trader and understand the fundamentals that affect the grain markets. If you’re just getting started, corn is one of the best commodities to begin with because it’s highly liquid, but you should make sure you’re confident in how to do it before you get going.

An alternative way to invest in corn is to buy shares in a company that operates in the grain market. Two of the top ones are Bunge and Archer-Daniels-Midlands. Their performance reflects the corn market, with less volatility, and stocks can be a bit more beginner-friendly than diving straight into commodities trading.

However you choose to get exposure to corn, you need to track how the market is doing and stay on top of any events that might affect the price down the line. Use our expert market analysis to help you:

Trading corn for beginners

The most important part of trading corn is research. This is true whether you have traded commodities before or not, because it’s crucial that you understand the corn market in particular and the factors that affect it.

What to do before starting to trade

Before you make your first trade, read through our list below. If you follow these pointers you’ll be prepared for whatever the market throws at you and can avoid making expensive mistakes.

1. Research the commodity. You need to understand what a commodity does, why it has value, and what sort of world events are likely to affect its price. If you research the market well, you’ll be able to make trades at the right moments.
2. Make sure you understand the basics of commodities trading. Be aware of all the different ways you can trade. New traders should understand that there are lots of options available, while understanding how they can be used in tandem is a gateway to becoming a more advanced trader in time. You can learn more about these below.
3. Decide between long term and short term trading. Decide how soon you expect to see returns. If you have a long time frame, you can afford to be slower and more risk-averse as a trader. The quicker you want to make money, the more active you need to be.
4. Set a budget. Fix your budget in advance so that you never risk more than you can afford to lose. This also affects your trading strategy, as the more money you have the more you can try out different options, while smaller budgets might be best served by investing in corn stocks or ETFs instead.
5. Find a broker platform. Find a platform to make your trades through. Use our table of the best ones, or have a look at our reviews to help you.

The different ways to trade corn

You can trade grain in many different ways. We have summarised all of your options here, and you should read through them so that you know what’s out there before you start. Then choose one that best suits your budget and trading goals.

• Spot trading. The ‘spot’ is the price of a commodity right now. Spot trading tends to be done using contracts for difference (CFDs), where you can predict that a price will have gone up or down by a certain date in the future.
• Futures contracts. Corn futures are an agreement to buy the grain at a fixed price on a set date, often three months from now. They’re a popular way to trade any commodity as you can use them to speculate on prices a few months in advance.
• Options contracts. Options give you the choice to buy a commodity on a fixed date in the future. The main difference is that with a corn option you aren’t obligated to buy, while futures are a firm agreement that you can’t back away from.
• Spread betting. With spread betting you bet on how the market is going to perform. You choose a stake and pick which way you think it’s going to go. You make money from your stake multiplied by the amount of points the market moved that way. The reverse is also true: you lose your stake for every point it goes against you.
• Stocks. An alternative way of investing in corn is to buy shares in a company that produces or sells it. These tend to be less volatile than the grain price and require less trading expertise, but still track the performance of the industry.
• Grain ETFs. An ETF is a publicly-traded fund that owns lots of stocks from the same industry, sector, or exchange. A grain ETF owns stocks in companies involved in the corn, wheat, and barley industries, for example, and are an even easier way to get involved than picking individual stocks. You can buy an ETF through your broker just like you would a company’s shares.

To learn more about any of these trading methods, you can go to our course page. To start trading right away, sign up with a commodities broker.