Corn is a member of the grass family of plants and is a native grain of the American continents. Fossils of corn pollen that are over 80,000 years old have been found in lake sediment under Mexico City. Archaeological discoveries show that cultivated corn existed in the southwestern U.S. for at least 3,000 years, indicating that the indigenous people of the region cultivated corn as a food crop long before the Europeans reached the New World. Corn is a hardy plant that grows in many different areas of the world. It can grow at altitudes as low as sea level and as high as 12,000 feet in the South American Andes Mountains. Corn can also grow in tropical climates that receive up to 400 inches of rainfall per year, or in areas that receive only 12 inches of rainfall per year. Corn is used primarily as livestock feed in the United States and the rest of the world. Other uses for corn are alcohol additives for gasoline, adhesives, corn oil for cooking and margarine, sweeteners, and as food for humans. Corn is the largest crop in the U.S., both in terms of the value of the crop and of the acres planted.
The largest futures and options market for corn is at the Chicago Board of Trade (CBT), division of the CME Group. Corn futures and options also trade at ICE Futures U.S., the Bolsa de Mercadorias & Futuros (BM&F), the JSE Securities Exchange, the Mercado a Termino de Buenos Aires (MTBA), and the NYSE LIFFE European Derivatives Market. Corn futures are traded on the Budapest Stock Exchange (BSE), the Dalian Commodity Exchange (DCE), the Kansai Commodities Exchange, the Moscow Exchange, Rosario Futures Exchange, and the Tokyo Grain Exchange (TGE). The CBOT futures contract calls for the delivery of 5000 bushels of No. 2 yellow corn at par contract price, No. 1 yellow at 1-1/2 cents per bushel over the contract price, or No. 3 yellow at 1-1/2 cents per bushel below the contract price.
Prices - Corn futures prices (Barchart.com symbol code C) traded sideways in Q1 2013 and then tumbled by more than -$1.00 per bushel in April to a 10-month low of $6.265 on signs of abundant supplies after the March 28 USDA Grain Stocks report showed that U.S. March 1 corn stocks were at 5.399 billion bushels, which was about 350 million bushels above the market consensus. Also, heavy rains during the spring of 2013 relieved drought conditions in the U.S. Midwest. However, the cold, wet spring weather delayed corn planting and corn prices rebounded to over $7.00 a bushel into early-July. Nevertheless, the USDA estimated U.S. 2013 corn planted acreage at 97.379 million acres, the most since 1936, which prompted the USDA to predict a record U.S. 2013 corn crop of 13.950 billion bushels. In addition, U.S. corn supplies were abundant after the USDA in the July 2013 WASDE report raised its 2013/14 U.S. corn ending stocks estimate to a 9-year high of 1.959 billion bushels. The USDA also forecast record 2013/14 global corn production of 957 MMT and record corn ending stocks of 151 MMT. These signs of a record corn production and huge supplies sent corn price tumbling the second-half of 2013. Corn prices fell further in October when the U.S. Environmental Protection Agency (EPA) proposed a cut in the Renewable Fuels Standard (RFS) overall ethanol mandate for 2014 to 15.21 billion gallons from the 18.15 billion gallon level originally set by statute. That would mean a cut in the corn-based ethanol mandate to 13.0 billion gallons from 13.8 billion gallons in 2013. Corn prices took another hit in December on Chinese demand concerns after China, the world's second biggest corn consumer, ordered wider inspections of corn imports to ensure they did not contain an unapproved genetically-modified MIR 162 variety of U.S. corn. As of December 19, 2013, China had rejected twelve U.S. corn shipments totaling 545,000 MT of corn that contained MIR 162. Corn prices continued to sink and in December posted a 3-1/3 year low of $4.10 a bushel. Prices finished 2013 down -39.6% at $4.22 a bushel.
Supply - World production of corn in the 2013-14 marketing year rose +12.0% to 966.631 million metric tons, a new record high. The world's largest corn producers are the U.S. with 36.6% of world production, China (22.5%), and Brazil (7.2%). Corn production in both China and Brazil has nearly tripled since 1980. Production in the U.S. over that same time frame has risen by about 50%. The world area harvested with corn in 2013-14 rose +1.1% yr/yr to 321.8 million hectares, a new 14-year high. World ending stocks of corn and coarse grains in 2013-14 rose +16.7% to 191.1 million metric tons.
U.S. corn production estimates for the 2013-14 marketing year (Sep-Aug) rose by +29.2% yr/yr to 13.925 billion bushels. U.S. farmers harvested 87.668 million acres of corn for grain usage in 2013-14, which was up +0.3% yr/yr. U.S. corn yield in 2013-14 rose +28.7% to 158.84 bushels per acre. U.S. 2013-14 ending stocks rose by +15.2% to 1.456 billion bushels. The largest corn producing states in the U.S. in 2013 were Iowa with 15.5% of U.S. production, Illinois (15.1%), Nebraska (11.7%), Minnesota (9.4%), and Indiana (7.4%). The value of the U.S. corn crop in 2012-13 (latest data) was $77.351 billion.
Demand - World consumption of corn and rough grains in 2013-14 rose +8.7% yr/yr to 1.232 billion metric tons, a new record high. The U.S. distribution tables for corn show that in 2012-13 the largest category of usage, aside from animal feed, is for ethanol production (alcohol fuel) with 5.000 billion bushels, which is 78.1% of total non-feed usage. That was up +7.6% yr/yr. Corn usage for ethanol is more than seven times the usage in 2000. After ethanol, the largest non-feed usage categories are for high fructose corn syrup (HFCS) with 7.8% of U.S. usage, alcoholic beverages (7.6%), glucose and dextrose sugars (4.4%), corn starch (4.3%), cereal and other corn products (3.2%).
Trade - U.S. exports of corn in 2013-14 rose +122% to 1.625 billion bushels. The largest destination countries for U.S. corn exports are Japan, which accounted for 36% of U.S. corn exports, Mexico (27%), and Venezuela (6%).
Articles from the Commodity Research Bureau (CRB) Commodity Yearbook. The single most comprehensive source of commodity and futures market information available, the Yearbook is the book of record of the Commodity Research Bureau, which is, in turn, the organization of record for the commodity industry itself. Its sources - reports from governments, private industries, and trade and industrial associations - are authoritative, and its historical scope is second to none. Additional information can be found at www.crbyearbook.com.