Overview –

Amidst the global pandemic the commodity sector has soared. Also agricultural investments may be of interest in Q1 for which a seasonality in price between December to January can historically can be identified.

Corn is the most liquid and active market in grains, with 350,000 contracts traded per day on average and open interest peaking at 1.7 million. It is the most widely grown crop in the United States. The world produced over 41 billion bushels in 2017/18, but 11 times that many bushels were traded on the futures exchange in 2017. The USDA World Agricultural Supply and Demand Estimate (WASDE) report offers an opportunity for traders to take a market view around the report release and then take action in the futures market.

Corn futures offer a central, transparent point of global price discovery in a market that can shift frequently based on weather conditions, politics, crop conditions, shipping, and freight issues, and more.


Key Reports/Factors that Move Markets –

  • Weather Events Across the world, the local weather in specific growing regions may impact the supply and thus the price of corn.
  • USDA World Agricultural Supply and Demand Estimate (WASDE) Report offers a monthly comprehensive forecast that often shifts the corn market in an unexpected direction.
  • USDA Prospective Plantings Report, this contains details of the quantity and type of crop US farmers intend to plant.
  • Grain Stocks Reports Issued four times a year by the National Agricultural Statistics Service (NASS), these reports offer updates on stocks of corn and other major grain & oilseed crops by state and by position.
  • US Crop Production Reports as it is the world’s largest exporting country for corn offering insights into global demand.


Current market –

Export demand for corn has been one of the most significant drivers behind recent price rallies. Total export sale volume from the U.S. was reported at 347 million bushels. Export volumes typically peak in early April to mid-May. US corn export volumes reduce in early November as other crops enter export channels.

Chinese corn imports were at over 39.4 million bushels for September 2020, according to monthly Chinese customs data. Supply shortages and production issues have led to purchase nearly 263.8 million bushels this year internationally.

Quarterly U.S. Bioenergy Statistics report data released in late October showed 4.582 billion bushels of corn were consumed in the 2019/20 marketing year for ethanol production. The estimate is 524 million bushels fewer than ethanol corn consumption in 2018/19 due in large part to a reduction in fuel demand amid the pandemic.

Commodities can be a safe haven for investors during periods of rising inflation, which has been on the upswing since lockdowns relaxed. But recent increases to inflation rates are still below the Federal Reserve’s threshold for potential interest rate increases. Speculative funds will likely remain interested in commodities until these inflationary concerns ease off.

Corn shipments from USDA’s weekly Export Inspections report were 762,937 MT. That was down 17% week on week, but still 90% above the same week last year. China was the top destination with 271,922 MT shipped. Japan was also the destination for 219,086 MT.

In Conclusion –

A continuation of strong prices will depend largely on steady export demand from China and any potential downward yield projections USDA-NASS forecasts in the coming months. The upward price momentum was a long-awaited reward to farmers who held on to old crop stocks outside of the marketing window over the past several growing seasons. The uptrend may be expected to continue, while market is trading above support level 425, which will be followed by reaching resistance level 455.