Corn Dec '19 (ZCZ19)
|Tick Size||1/4 cent per bushel ($12.50 per contract)|
|Daily Limit||25 cents per bushel ($1,250 per contract) Expanded limit 40 cents|
|Contract Size||5,000 bushels|
|Trading Months||Mar, May, Jul, Sep, Dec (H, K, N, U, Z)|
|Trading Hours||7:00p.m. - 7:45a.m. and 8:30a.m. - 1:20p.m. (Settles 1:15p.m.) (Sun-Fri) CST|
|Value of One Futures Unit||$50|
|Value of One Options Unit||$50|
|Last Trading Day||The business day prior to the 15th calendar day of the contract month|
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 market for corn is at the CME Group. Corn futures also trade at the Bolsa de Mercadorias & Futuros (BM&F) in Brazil, the Budapest Commodity Exchange, the Marche a Terme International de France (MATIF), the Mercado a Termino de Buenos Aires in Argentina, the Kanmon Commodity Exchange (KCE) in Korea, and the Tokyo Grain Exchange (TGE). The CME 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 - CME corn futures prices (Barchart.com electronic symbol code ZC) trended higher the first half of 2018 and posted a 2-1/2 year high of $4.1225 a bushel in May. The plunge in the dollar index to a 4-year low in February 2018 bolstered U.S. corn export prospects and prompted the USDA to raise its U.S. corn export estimates and to cut its global corn ending stocks estimates. The USDA in May 2018 projected that U.S. 2018/19 corn exports would climb to a record 2.475 billion bushels and that global 2018/19 corn ending stocks would tumble -19.6% yr/yr to a 6-year low of 159.35 MMT. Also, near-record U.S. ethanol production cut into U.S. corn ending stocks as the USDA projected a 2018/19 U.S. stocks-to-use ratio at a 5-year low of 12.0% and a world stocks-to-use ratio at a 45-year low of 14.4%. In addition, the USDA projected that 2018/19 U.S. corn planted acreage would fall to a 3-year low of 89.1 million acres. In June, however, corn prices plunged and fell to a 1-1/2 year low in July of $3.2975 a bushel. An increase in trade tensions undercut corn prices after China added tariffs on U.S. agricultural products in retaliation for U.S. tariffs. Also, near-perfect weather in the Midwest benefitted yields that led to a bumper U.S. corn crop as the weekly USDA Crop Progress report showed that 75% of the U.S. corn crop on July 8 was in good-to-excellent condition, the best condition for that time of year since 2004. The USDA projected the U.S. 2018/19 corn crop at 14.778 billion bushels, the second biggest crop ever, and projected the global 2018/19 corn crop at 1068.31 MMT, also the second largest corn crop ever. Corn prices then recovered from their worst levels and ratcheted higher into year-end on improved trade prospects after the announcement of the U.S.-Mexico-Canada trade deal. Also, in December, President Trump and Chinese President Xi Jinping announced a 90-day suspension of any new tariffs as they worked toward a trade deal. The USDA forecast that China would import 5 MMT of U.S. corn in the 2018/19 marketing year, the most in 4 years, after China's 2018 corn production fell to 257.3 MMT, the lowest since 2014. Corn prices finished 2018 up +6.9% yr/yr at $3.7500 a bushel.
Supply - World production of corn in the 2018/19 marketing year is forecasted to rise +2.2% yr/yr to 1.100 billion metric tons, but still below the 2016-17 record high of 1.122 billion. The world's largest corn producers are forecasted to be the U.S. with 33.8% of world production, China with 23.3%, and Brazil with 8.6%. Production in both China and Brazil has more than tripled since 1980. Production in the U.S. over that same time frame has about doubled. The world area harvested with corn in 2018/19 are forecasted to rise +1.1% yr/yr to 322.5 million hectares, down from the 2016/17 three-decade high of 329.7 million hectares. World ending stocks of corn and coarse grains in 2018/19 are forecasted to fall -17.9% yr/yr to 181.6 million metric tons.
U.S. corn production for the 2018/19 marketing year (Sep-Aug) is forecasted to rise rise +0.2% yr/yr to 14.626 billion bushels. U.S. farmers are forecasted to harvest 81.767 million acres of corn for grain usage in 2018/19, which is down -1.1% yr/y. The U.S. corn yield in 2018/19 is forecasted to rise +1.3% yr/yr to 178.9 bushels per acre, which is a new record high. U.S. 2018/19 ending stocks are forecasted to fall -16.8% yr/yr to 1.781 billion bushels. The largest corn producing states in the U.S. in 2018 were Iowa with 17.3% of U.S. production, Illinois with 15.6%, Nebraska with 12.3%, Minnesota with 9.4%, and Indiana with 6.9%. The value of the U.S. corn crop in 2017/18 was $48.485 billion.
Demand - World consumption of corn and rough grains in the 2018/19 crop year is expected to rise +1.5% yr/yr to 1.376 billion metric tons, down from the 2014/15 record high of 1.277. The U.S. forecasted distribution table for corn shows that in 2017/18 the largest category of usage, aside from animal feed, is for ethanol production (alcohol fuel) with 5.475 billion bushels, which is 79.1% of total non-feed usage. That was up +0.7% yr/yr. Corn usage for ethanol is more than nine times the usage in 2000. After ethanol, the largest non-feed usage categories are for high fructose corn syrup (HFCS) with 6.6% of U.S. usage, glucose and dextrose sugars with 5.3%, corn starch with 3.4%, cereal and other corn products with 3.0%, and alcoholic beverages with 2.2%.
Trade - U.S. exports of corn in 2017/18 rose +14.4% yr/yr to 63.505 million tons. The largest destination countries for U.S. corn exports are Mexico with 24.4% of total exports, Japan with 21.7, South Korea with 9.5%, and Taiwan with 4.3%.
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