corn trading: how can you invest in corn?
Corn is a commodity in which you can easily invest with a so-called broker. In this article we will look at how you can trade in corn. We also discuss the factors that influence the price of corn. With the information in this article you can determine the right time to buy or sell corn with a profit.
How do you invest in corn?
There are different ways to invest in corn. You can trade directly in the price of corn, or you can choose to invest in companies that deal with the commodity. Below we discuss the different methods you can use to invest in corn.
Active trading in corn
It would be very impractical to have a large quantity of maize delivered to your home and then sell it via eBay. Fortunately, the clever minds of this world have devised a better way of investing in corn. This is usually done via so- called contracts on the raw material.
With a contract on the raw material you can speculate on price rises and falls. This makes it possible to trade maize in contracts via the internet. These contracts on the commodity corn usually move with the price, and therefore it is possible to earn large amounts of money trading this commodity.
But where can you actually trade in price differences on maize CFD’s? This is best done at the broker Plus500. With Plus500 you can speculate on price rises and falls. A big advantage of Plus500, is the fact that you can try out the possibilities without any risk with a demo account. Use the button below to directly open a free demo account:72% of retail CFD accounts lose money.
You can also choose to invest in corn by buying shares in a company that deals in this commodity. A good example of a similar company is Kellogg’s. Kellogg is an American company mainly known for the production of various breakfast cereals. The price of corn plays an important role in the development of this share.
However, it is important to remember that these are always indirect investments. The price of a share is influenced by various factors. That is why you should carefully examine how the company is doing and what its plans for the future are. That way you avoid throwing money away!
A good party to buy shares is eToro. With the button below you can open an account with this broker immediately:67% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you can afford to take the high risk of losing your money.
Investing in ETFs
It is also possible to invest in maize by buying a participation in a special fund. The Teucrium Corn Fund is a good example of a fund dealing with maize. This fund buys futures in this commodity.
Why is investing in corn interesting?
There are several reasons why investing in corn can be interesting. In this article we discuss several reasons.
Worldwide, economies are still growing strongly. The best known example of this, of course, is China’s economy. With more than a billion hungry bellies to fill, corn is a raw material for which demand will only increase. Moreover, prosperity is increasing worldwide, which will lead to an increase in the consumption of meat. In practice, corn is also often used as food for livestock.
Protection against inflation
In bad economic times, you often see Central Banks printing money. This causes inflation. This makes the money in your bank account worth less. By investing in a commodity like corn, you can protect yourself against inflation. After all, the price of corn rises along with global inflation.
By also investing in a commodity such as corn, you reduce the risk of your portfolio. If you only invest in shares, you have a greater chance that your investments will be worth less at some point. Diversification ensures a more stable growth of your assets.
Maize is used to produce biofuels such as ethanol. In South America ethanol is widely used for cars. But the demand for biofuels is also increasing in the European Union. This can make an investment in corn interesting.
It fits the trend
Trading in corn is in line with the global trend. With the emergence of new markets such as China, India and Brazil, the demand for both food and energy is increasing. As a result, the demand for a raw material such as corn can increase considerably.
At the same time, maize also fits into a world where climate change is receiving more and more attention. People are looking for biofuels, and corn can be used for that purpose. Rising temperatures also increase the risk of future crop failures. This makes it even more attractive to invest in maize.
What do you have to watch out for?
Investing always involves risks. If you are going to invest in corn, this is of course no different. Let’s therefore briefly discuss the risks of investing in corn.
Crop failures or even rumours of crop failures can increase the value of corn. Dry times cause large shortages. However, when the weather is good, there may be an abundance of maize on the market. This can lower the price of the raw material.
Political circumstances also influence the price of maize. After Russia conquered parts of Ukraine, it was no longer possible for Russia to export maize because of sanctions. These kinds of circumstances can strongly influence the price of corn.
When trading in corn, it is therefore important to keep a close eye on the macro- economic conditions. Corn can be a very volatile commodity, with the price of the commodity falling or rising by as much as 15% in a week. As an active trader, you can benefit strongly from these types of market movements.
In this part of the article we discuss some companies in which the raw material corn plays a major role. If you want to invest indirectly in the commodity, you may consider buying these shares.
Ingredion is a leading company in the sale of corn-based sweeteners. Americans love sweet and unhealthy products and Ingredion knows how to respond to this. The company is investigating opportunities to expand into South America and Asia. If they succeed in selling many products there as well, the company’s profitability can simply increase further.
Green Plains is an American company that converts corn into ethanol. This ethanol is then used to produce vinegar that can be found in your favourite Heinz ketchup.
These products will probably continue to be popular, so an investment in Green Plains can turn out just fine.
Archer Daniels Midland
This is a company that is directly active in the corn business. The company grinds 72 million tablespoons of corn per month. With this they produce, among other things, large quantities of ethanol. With almost 2 billion gallons of ethanol production per year they are a colossal player. So, with an investment in Archer Daniels Midland you take a large corn position.
What is corn used for?
Anyone who thinks that corn is only used as food is deceived. For example, the raw material is also used for the production of ethanol. Many cars in South America still run on this fuel. Corn is also an important ingredient in various paints, toothpaste, cosmetics and even explosives!
What is the current price of corn?
Do you want to know the current price of the raw material corn? Below you can see the price at which you can trade maize CFDs:
Why should you trade corn?
Corn is an important raw material with an important role in food production. It is used all over the world and generally serves as a source of nutrients. Commodities are generally straightforward to understand: where stocks or currencies seem complicated to many people, trading in a commodity such as corn feels very natural.
What is also nice about the raw material is that the balance between supply and demand is much clearer. In the case of maize, the price is mainly determined by the balance between supply and demand; rumours about directors or strange lawsuits do not play a role in trading maize. But what are the aspects that influence the price of maize?
The price of corn
There are several factors that can influence the price of maize. Central to this, of course, is the harvest. When there are many crop failures, the price of the raw material rises rapidly. When there are no failed harvests and there are surpluses of corn, the price will not rise.
Maize, however, has more applications: it is also used as a biofuel. A new form of corn under the name tropical corn contains more sugar and is used as a fuel. Nowadays, maize is genetically modified to be more resistant to diseases and herbicides.
There are useful documents that you can use when estimating the price developments of the raw material corn. Every year in the second half of March, the U.S. Department of Agriculture publishes a document called Prospective Plantations which keeps track of how much corn is planted by farmers in that season. Other interesting documents that track supply and demand are The Grain Stocks and Monthly Crop Production.
Concluding: trading in maize
Speculating on the price of corn can be very profitable. By keeping up with the recent developments around the raw material, it is possible to keep up with the price trend of corn. By responding to these developments correctly, you can make a nice profit.