Corn

Corn is the most liquid grain market seeing increasing demand in the food and energy industries. This guide to trading corn unpacks live prices and opening hours, plus popular trading strategies and market economics. See our list of the top corn brokers in the UK to start trading:

How Does Corn Trading Work?

Corn trading refers to the buying and selling of corn in the commodities marketplace. Buyers and sellers typically trade corn futures, which are agreements to buy or sell a specific amount of corn at a predetermined price and date in the future. These contracts allow investors to speculate on the future price of corn, and can be bought and sold on commodity exchanges such as the Chicago Mercantile Exchange (CME) and the New York Mercantile Exchange (NYMEX).

Alternatively, the top corn brokers offer derivatives like CFDs that allow retail traders to go long or short on the price of corn without taking delivery of bushels of the grain.

Corn is one of the most widely produced and traded agricultural commodities in the world, and is used in many industries like food and beverage production, animal feed, and biofuel.

The price of corn can be influenced by various factors, like weather conditions, supply and demand, geopolitical events, and government policies.

History

Corn has been an important crop for thousands of years, with commodity use dating back to ancient times. However, the modern corn trading industry emerged in the 19th century, with the development of commodity exchanges and futures markets.

The Chicago Board of Trade (CBOT) was founded in 1848 and quickly became the primary marketplace for corn trading. Initially, corn traders at the CBOT would buy and sell physical corn directly with farmers and grain elevators, but in the late 19th century, futures contracts were introduced as a way to manage risk and stabilise prices over upcoming months and years.

By the early 20th century, corn futures became integral to the global commodities market, and were traded on exchanges around the world. The introduction of new technologies, such as telegraphs and later computers, helped to facilitate faster and more efficient corn trading.

Today, corn remains a widely traded agricultural commodity, with futures traded on exchanges such as the CME Group and the Intercontinental Exchange

Corn Price Chart

Note, the corn trading symbol may change at different brokers and platforms.

What Influences The Price of Corn?

• Weather conditions: Corn supply is sensitive to weather conditions, temperature, precipitation, and other weather patterns, which can impact crop yields and supply. In 2019, the UK’s Department for Environment, Food and Rural Affairs (DEFRA) reported that the country’s corn production had decreased due to a dry spring and summer. This led to a rise in corn prices, which affected UK farmers and traders who rely on the domestic corn market.
• Supply & demand: Corn is used in several industries, and changes in demand impact the price of corn. In 2020, the COVID-19 pandemic caused disruptions in the global supply chain, creating a shortage of corn-based products in the UK, amongst other countries. A decrease in corn production and logistical issues in transporting corn to the UK resulted in corn prices rising.
• Ethanol production: Ethanol is a biofuel that is made from corn in many countries, including the United States. Changes in the demand for ethanol can have a direct impact on the price of corn at online brokers.
• Government policies: Governments around the world often implement policies that impact the price of corn, such as subsidies, tariffs, and import/export regulations.
• Currency exchange rates: Corn is a globally traded commodity, and changes in exchange rates between currencies can impact the price of corn in different countries, including at UK brokers.
• Competition from other crops: Corn competes with other crops, such as soybeans for acreage and resources. Changes in the price of these competing crops can impact the price of corn.
• Current events: Major events can impact corn trading prices at brokers. For example, in 2017, Brexit had an impact on corn; the value of the British pound dropped significantly, making imports of corn more expensive for UK buyers. This led to higher prices for corn-based products, affecting UK consumers and businesses.

How To Trade Corn

Investors can speculate on corn prices through several vehicles:

• Shares of Agricultural Companies: Traders can invest in the shares of companies involved in the production, processing, or distribution of corn, such as agricultural machinery manufacturers or food and beverage companies that use corn as a primary ingredient. Publicly-traded companies operating in the corn industry include Archer-Daniels-Midland Company (ADM) and Ingredion Incorporated (INGR).
• Contracts for Difference: Popular with retail investors, CFDs allow traders to speculate on rising and falling prices of corn without taking ownership of bushels of the grain. Leverage also enables traders to increase their purchasing power with a small cash deposit.
• Futures: Futures or mini futures contracts are agreements to buy or sell a specific amount of corn at an agreed price and date in the future. Corn futures are traded on major exchanges such as the Chicago Mercantile Exchange (CME) and the Intercontinental Exchange (ICE).
• Options: Options contracts give traders the right, but not the obligation, to buy or sell corn at a certain price at a future date. Options contracts can be used to manage risk and speculate on the future price of corn.
• Exchange-Traded Funds: ETFs that track the price of the corn sector or corn-related companies can be traded on major stock exchanges, such as the NYSE or NASDAQ.
• Over-the-Counter (OTC): OTC markets are decentralised trading venues allowing buyers and sellers to trade directly with each other, without going through a centralised exchange. OTC trading of corn and other commodities is typically conducted through online brokers and dealers.

XTB Corn Trading Conditions

Why Trade Corn?

• High Liquidity: Corn is one of the most heavily traded commodities, and therefore there is high liquidity in corn futures and options markets, making it easy for traders to buy and sell contracts at competitive prices.
• Price Transparency: The price of corn is widely reported and tracked, allowing traders to access real-time market data and make informed trading decisions.
• Diversification: Corn is globally traded and can be used to diversify portfolios. By investing in corn futures or related exchange-traded funds (ETFs), for example, traders can spread their risk across a variety of asset classes and trading vehicles.
• Risk Management: Corn futures can be used as a hedging tool. For example, a farmer may use futures contracts to lock in a guaranteed price for their crop before it is even harvested, providing protection against price fluctuations. Equally, traders can use corn as a hedge against other markets.
• Transparency: Trading corn contracts is often conducted on regulated exchanges, which provides transparency and standardised contract terms.

Risks Of Trading Corn

• Price Volatility: The price of corn can be volatile, influenced by a range of factors such as weather, supply and demand, and geopolitical events. This can create uncertainty and risk resulting in losses if traders make incorrect forecasts.
• Weather Risk: Corn is highly dependent on weather conditions, which have an impact on crop yields and supply. This makes the market unpredictable and harder for traders to predict future price movements.
• Margin Requirements: Derivative contracts require traders to maintain margin at their corn brokers to cover potential losses. This can be a significant financial commitment.
• Market Manipulation: The corn market is susceptible to manipulation by traders or other market participants. This can create artificially high or low prices and risk for beginner traders.
• Regulatory Risk: Changes in government policies or regulations can impact prices and corn trading activity at leading brokers and platforms.

Strategies

• Seasonal Trading: Analysing historical price data can help identify seasonal trends in the corn market. For example, if the price of corn tends to rise in the spring when planting season begins, a trader may look to buy corn futures contracts in the winter in anticipation of this price increase.
• Spread Trading: Spread trading involves simultaneously buying and selling related contracts to profit from price differentials. For example, a trader may buy a corn futures contract for delivery in December and simultaneously sell a corn futures contract for delivery in March, with the expectation that the price difference between the two contracts will narrow.
• Technical Analysis: Analysing historical price data and identifying patterns or trends in the corn market can inform trading decisions. Traders using technical analysis may use historical charts, trendlines, and technical indicators to identify potential entry and exit points. TradingView is a popular charting tool for corn trading.
• Fundamental Analysis: Analysing supply and demand factors help inform corn trading forecasts. This includes assessing weather forecasts, government reports on crop yields, and global demand for corn-based products.
• News Trading: News trading involves monitoring events and updates that influence the corn market, like weather forecasts, crop reports, or political developments. Traders using this strategy may enter or exit trades based on or in anticipation of the latest crop trading news.

Note, corn brokers may have restrictions on the strategies that can be used on their trading platforms.

Corn Trading Times

Trading times are traditionally based on the schedule of the Chicago Mercantile Exchange (CME), which is where corn futures are primarily traded. The CME operates on Central Time with corn futures trading hours:

• Monday – Friday: 8:30 AM – 1:20 PM CT
• Sunday: 7:00 PM – 7:45 AM CT, then 8:30 AM – 1:20 PM CT

Note that these trading times apply to corn futures contracts. Other forms of corn trading, such as CFDs or corn-related stocks, may have different trading hours.

Some corn brokers also offer extended trading hours or pre-market trading. Trading hours may be subject to change due to market holidays or other events.

Bottom Line On Corn Trading

Corn trading can be lucrative for traders looking to invest in agricultural commodities. Understanding the factors that influence corn prices, such as weather patterns, supply and demand, and government policies, is key to successful corn trading. Investors can trade corn through multiple vehicles, including CFDs, ETFs, futures and options.

Head to our ranking of the best corn brokers to start trading.

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