What Market Fundamentals Can Affect The Corn Futures?
In 2006 the United States produced 42% of the world’s corn. The United States is not
only the world's top corn producer, but also the top exporter. Therefore when following corn prices it is important to follow
the US corn crop.
The corn market follows a fixed cycle of production. The
corn cycle goes from planting, to pollination, to harvest. During these key stages of the crop's development the corn futures
prices are very sensitive to any potential supply disruption.
1. Corn Planting
The relative price of corn to other crops, and crop rotation needs influence planting acreage allocation. Corn planting in
the United States typically begins in late March and is completed by mid to late May. During March and April in the early
stages of the planting effort corn futures prices have tended to increase.
the planting phase it is important to watch precipitation levels. Too much rain could result in a late planting. That could
mean a loss of acreage or late development which could result in a lower quality crop or lower yields. Too little rain could
prevent seeds from germinating properly, which can result in lower production levels.
2. Corn Pollination The Corn crop typically pollinates in late June, and early July. During the month of June corn
futures have tended to increase. However, since even a poor pollination ensures some future corn production the market doesn’t
tend to increase as much during pollination as it does doing planting.
the pollination phase it is important to watch temperature and precipitation levels. High temperatures and a lack of precipitation
can result in poor pollination and lower pollination. Low temperatures and excessive precipitation can also affect pollination
which could result in a production loss.
3. Corn Harvest Corn is typically
harvested in October and November. Corn futures prices have tended to decrease during harvest. However, harvest delays, or
at least the fear of such, can cause futures prices to increase.
the later stages of maturation and/or harvest, excessive heat can cause crop damage. Prolonged exposure to moisture can reduce
quality, allow mold-based diseases to spread, as well as delay the harvesting effort due to the ground being to muddy for
fieldwork. Early frosts can damage crops as well.
4. Corn Diseases Corn
diseases can cause harvest losses, affect the quality of the harvested crop, and cause storage losses. Corn diseases can increase
production costs and have negative effects on marketing and cropping decisions. Problems with germination and stand establishment
that are related to seed decay, damping-off, and seedling blights are often encountered in the field. These losses can be
costly, especially if replanting is necessary. Diseases may cause leaf spots or leaf blights, wilts or premature death of
5. USDA Crop Reports The USDA publishes several key crop reports
that are helpful in your research and trading of corn futures and options. The first main report comes out at the beginning
of the corn growing season. It is the USDA Prospective Plantings Report. It is released around the end of March. It summarizes
how much and which crops the farmers expect to plant for the upcoming season. The USDA Monthly Crop Production Report is released
around the 10th of each month. The report gives an updated estimate of supply and demand for corn. The USDA Grain Stocks Report
provides information on the current supply of corn and other grains in the U.S. and the world.
These are just some of the basic fundamentals to keep in mind when you are considering a trade in the corn market.
Before opening up a commodity account to trade corn you should consult with a licensed commodity broker that follows the corn
market to discuss investment strategies.