Investing in corn: how can you do it best?
How to invest in corn?
In this article, we will discuss how to invest in corn. We will also look at the factors that influence the price of corn and give you some investment tips.
Where can you invest in corn?
You can invest in corn stocks & ETFs with the following brokers:
| Brokers | Benefits | Register |
|---|---|---|
 | Buy corn without commissions. Your capital is at risk. Other fees may apply. | |
 | Speculate on price increases and decreases of corn with a free demo! | |
 | Benefit from low fees, an innovative platform & high security! | |
 | Speculate with CFD's on increasing & decreasing prices of corn! 86% of retail CFD accounts lose money. |
How to 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 ways you can invest in corn.
Way 1: Actively investing in the price of corn
It would be very impractical to have a large amount of corn delivered to your home and then sell it through, for example, a platform like Marktplaats. Fortunately, the smart minds of this world have come up with a better way to invest in corn: by using derivatives.
Derivatives make it possible to actively speculate on the price of corn. You can use, for example:
With a contract on the commodity, you can speculate on both price increases and price decreases. Would you like to try trading corn without risk? Open a free demo!
Way 2: Investing in corn stocks
You can also choose to invest in corn by buying stocks in a company that deals with the commodity. A good example of a comparable company is Kellogg’s. Kellogg’s is an American company that is primarily known for the production of various breakfast cereals. The price of corn plays an important role in that.
You can invest in different corn stocks, for example:
- Archer-Daniels-Midland Company (ADM)
- Bunge Limited (BG)
However, it is important to remember that these are always indirect investments. The price of a stock is influenced by various factors. Therefore, research well how the company is doing and what the future plans are. This way you can prevent throwing your money away! Read more here about how to buy stocks.
Method 3: investing in ETFs
It is also possible to invest in corn by purchasing a participation in a special fund. The Teucrium Corn Fund is a good example of a fund that deals with corn. This fund buys futures in this commodity.
Want to read in detail how ETFs work? Click here!
Why is investing in corn interesting?
There are several reasons why investing in corn can be interesting. In this article, we discuss various reasons.
1. Worldwide growth
The economies worldwide are still growing strongly. The most well-known example of this is, of course, the economy of China. With more than a billion hungry mouths to feed, corn is a commodity that the demand for will only increase.
Moreover, prosperity is increasing worldwide, which will lead to an increase in meat consumption. Corn is also often used as feed for livestock.
2. Protection against inflation
In economically tough times, central banks often print money, which leads to inflation. This makes the money in your bank account worth less. By investing in a commodity like corn, you can protect yourself against inflation. The price of corn increases with worldwide inflation.
3. Diversification
By also investing in a commodity like corn, you reduce the risk of your portfolio. When you only invest in stocks, there is a greater chance that all your investments will become less valuable at some point. More diversification ensures a stable growth of your assets.
4. Use as fuel
Corn is used for generating biofuels such as ethanol. In South America, ethanol is widely used for cars. But in the European Union, you can also see that the demand for biofuels is increasing. This can make investing in corn interesting.
5. It fits within the trend
Investing in corn fits within the global trend. Due to the rise of new markets such as China, India, and Brazil, the demand for both food and energy is increasing. The demand for a commodity like corn can therefore increase significantly.
At the same time, corn also fits in a world where climate change is receiving more attention. People are looking for biofuels, and corn can be used for that purpose. The likelihood of crop failures in the future is also increasing due to rising temperatures. This makes investing in corn even more attractive.
What are the risks of investing in corn?
Investing always involves risks. When you start investing in corn, this is, of course, no different. Therefore, let’s briefly discuss the risks of investing in corn.
1. Crop failures
Mis-harvests or even rumors of mis-harvests can cause the value of maize to rise. Dry weather leads to large shortages, but if the weather cooperates, there can be an abundance of maize in the market, causing the price of the commodity to drop. Therefore, it is important to keep an eye on the supply side if you want to invest in maize.
2. Political conditions
Political conditions also influence the price of maize. After Russia conquered parts of Ukraine, it became impossible for Russia to export maize due to sanctions. Such circumstances can strongly influence the price of maize.
Therefore, when you invest in maize, it is important to keep a close eye on the macroeconomic conditions. Maize can be a very volatile commodity, with the price of the commodity sometimes dropping or rising by as much as 15% in a week. Active traders can take advantage of this volatility.
Which maize stocks can you buy?
In this part of the article, we discuss some companies where maize plays a major role. If you want to invest indirectly in the commodity, you can consider buying these stocks.
Buy Ingredion stocks
Ingredion is a leading company in the sale of corn-based sweeteners. Americans love sweet and unhealthy products, and Ingredion knows how to capitalize on that. The company is exploring possibilities to expand further into South America and Asia. If they manage to sell a lot of products there, the profitability of the company could increase even further.
Buy Green Plains stocks
Green Plains is an American company that converts maize into ethanol. This ethanol is then used to produce vinegar that can be found in your favorite Heinz ketchup. These products are likely to remain in demand, making an investment in Green Plains a good choice.
Archer Daniels Midland
Archer Daniels Midland is a company that is directly involved in the maize business. The company grinds 72 million bushels of maize per month, producing large quantities of ethanol, among other things. With almost 2 billion gallons of ethanol production per year, they are a very big player. Investing in Archer Daniels Midland means taking a big maize position.
What is maize used for?
Those who think maize is only used as a foodstuff are mistaken. The commodity is also used, for example, in the production of ethanol. In South America, many cars still run on this fuel. Maize is also an important ingredient in various paints, toothpaste, cosmetics, and even explosives!
What is the current price of maize?
Do you want to know the current price of the maize commodity? Below, you can see the price for which you can trade maize with CFDs:
Why trade corn?
Corn is an important commodity with a significant role in food production. It is used all over the world and serves as a source of nutrition. Commodities are generally easier to understand: while stocks or currencies may seem complicated to many people, trading a commodity like corn can be emotionally satisfying.
What is also attractive about this commodity is that the game of supply and demand is much clearer. With corn, the price is mainly determined by the balance between supply and demand; rumors about directors or strange lawsuits do not play a role in trading corn.
How is the price of corn determined?
There are several factors that can influence the price of corn. Of course, the harvest is central. When there are a lot of crop failures, the price of the commodity quickly rises. When there are no crop failures and there are surpluses of corn, the price will not rise.
However, corn has more applications: it is also used as a biofuel. A new form of corn called tropical corn contains more sugar and is used as fuel. Nowadays, corn is genetically modified to offer more resistance to diseases and herbicides.
There are useful documents that you can use to estimate price developments for the corn commodity. Every year in the second half of March, the US Department of Agriculture publishes a document called Prospective Plantings, which keeps track of how much corn farmers plant in that season. Other interesting documents that keep track of supply and demand are The Grain Stocks and Monthly Crop Production.
Some final investment tips for investing in corn
- Diversify: by investing at different times, you can benefit from an average return. It is also recommended to spread your money across different investment products.
- Understand your investment product: read the terms and conditions of the investment product carefully. For example, with many derivatives, you pay financing interest, which can make long-term investing very expensive.
- Macro-economic investing: when investing in corn, the world economy strongly affects your results. Therefore, keep an eye on the economic situation and research how the demand and supply for corn are developing.
In conclusion: is investing in corn wise?
Speculating on the price of corn can be very profitable. The price of corn is strongly dependent on the quality of the harvests and the developments on the supply side. By playing into this well, you can achieve a good return by trading corn.