Corn Future and Corn Prices

Corn Future

Corn Future is a standardized contract traded an exchange between two parties that allow for the purchase and delivery of a standardized quantity. The quality of corn for a price agreed upon today at agreed upon contract price with delivery and payment occurring at a specified future date.

History of Corn

Corn future is an area of concern for many people. However; to know about the basics of corn is also interesting and important. Corn is commonly known as “maize” is a large grain plant. This plant produce ears of grain seed called kernels. These kernels are used in several different ways such as a staple food, livestock feed, and bio-fuel.

In prehistoric time, corn was originally domesticated in the Americas . After European contact in the Americas during the 15th-16th centuries it was carried back to Europe and introduced to other countries

Corn Future: Today’s Scope of Corn

Today corn is regarded as the most important crop in terms of production and acreage growth. According to the U.S. Department of Agriculture (USDA), the U.S. is the leading exporter of corn. It is currently accounting for 20% of the world’s corn. The major producer of corn accounting 39% of the world’s corn production in 2010. Most of the corn US used for livestock feed, accounting for over 90% of feed grain use and production.

Production Areas of Corn

Global production (figures as of 2012) of corn is approximately 700 million tons per annum with the United States leading the world in corn production at ~275M tons per year. It is the most widely grown grain crop in the Americas.

Other top producers include: China (208.3M), Brazil (71.3M), Argentina (25.7M), Mexico (22.1M), India (21.1M), Ukraine (20.9M), Indonesia (19.3M), France (15.6M) and South Africa (12.5M). In the United States, Iowa is the largest producer of corn which is followed by Minnesota, Nebraska and Illinois.

Corn Uses in US

During processing, corn may either be wet or dry milled depending on the desired use.

  • Wet millers process corn into syrup, oil, starch, glucose and dextrose, beverage alcohol, industrial alcohol and fuel ethanol.
  • Dry millers process corn into cereal, flour, corn grits, corn meal, and brewers grits for beer production.
  • In the U.S., the largest usage of corn crops is for livestock feed, which consumes roughly 43% of the 275M tones per year.
  • The second largest user of corn is ethanol producers which use up approximately 30% of crop production.

Investors and Traders of Corn Futures

Corn traders can be broken down into two main categories:

  1.  Hedgers
  2. Speculators

Hedgers of corn include consumers and producers of corn ranging from corn farmers to ethanol producers. It also include the food producers who want to reduce the risk of future price movements in the corn market. Rise in corn prices can impact their future operation.

Hedgers have a vested interest in the underlying asset and its delivery (will either deliver it or take delivery) and use futures contracts to hedge out price risk.

Corn speculators on the other hand don’t have a vested interest in corn (won’t deliver or take delivery of corn) and trade in and out of corn futures contracts based on speculations about the price fluctuation of corn over the period of the trade.

These speculators expecting the price to rise will go long corn futures (which will rise in value as the underlying corn prices rise) while speculators expecting a price drop in corn will go short corn futures.

Corn Futures Contracts

The Corn Future are traded on the Chicago Mercantile Exchange under the symbol “C” with the standard contract representing 5,000 bushels (roughly 127 metric tons) of corn. Corn trading is done either through the open outcry method or electronically on the CME Globex electronic platform.

Price quotes for corn futures are quoted in cents per bushel – if the price of a contract is traded at 450.50 ($4.505) it represents a total value of $22,525 ($4.505 per bushel x 5,000 bushels). Corn Futures contract months include: March (H), May (K), July (N), September (U) and December (Z).

International Corn Futures Trading

Corn Futures are also traded on international exchanges including the Euronext and Tokyo Commodity Exchange (TOCOM).

On the Euronext, corn trades under the symbol EMA with prices quoted in Euro cents per ton. The standardized contract is for 50 tons of fair and merchantable yellow and/or red corn. The minimum price movement is 25 Euro cents per ton (€12.50).

Corn Price Chart

The current price of corn as of April  2017 is $3.5950 per bushel.

Weekly Commodity Corn Future Price Chat

Week of 04/2017, O =365.570, H= 371.750, L=357.250, C=359.500, V= 1595410

corn future: corn price chart

Corn decreased 0.25 USd/bu or 0.07% to 359.25 on Monday April 10 from 359.75 in the previous trading session. Historically, Corn reached an all-time high of 849 in August of 2012 and a record low of 22.90 in November of 1932.

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