A field of corn is shown in Mill Hill, Pa., on Aug. 29, 2023.Gene J. Puskar/The Associated Press
Corn is the most actively traded and consumed agricultural product in the world and its price is driven by expected supply and demand. Corn futures are traded on the Chicago Board of Trade. Let’s dig in to this commodity a bit more using Canadian, U.S. and global perspectives.
Supply/demand
The global corn market is dominated by a few key countries. The United States accounts for 30 to 35 per cent of global annual production followed by China with 20 to 25 per cent. Brazil, Argentina and the Ukraine round out the top five producers and Canada’s corn production is just beyond the top 10 each year.
There are 90 million acres of corn planted annually in the United States for a total production of 390 million tonnes. (One tonne is about 39.4 bushels.) At 170 bushels per acre currently, yield in the United States is up considerably from 125 bushels per acre back in 2000. In Canada, in 2023 we produced 15 million tonnes of corn on 3.8 million acres. Canadian production was up 4 per cent over the prior year’s level based on both increased acreage and improved yields.
Globally, The International Grains Council (IGC) is forecasting a 71-million-tonne increase in corn production for the 2023/24 season to 1.23 billion tonnes. They also expect industrial and feed demand to improve and almost keep up with the increase in supply. (Note the marketing year begins at harvest and continues until just before harvest of the following year.)
Demand for corn is driven by livestock feed and ethanol production, with a lesser amount for human consumption. In the United States, 40 to 45 per cent of corn produced is used for ethanol production and another 40 per cent for livestock feed. The balance is either wet milled for corn syrup or dry milled into flakes for cereals, flour and meal. The United States and China each consume over 300 million tonnes of corn annually and the U.S. exported 43 million tonnes of corn in 2023. Of note, Brazil recently overtook the United States as the world’s largest exporter of corn and has the capacity to increase its production further from the 56 million tonnes they exported in year ending August, 2023.
The following chart shows how the price of corn has changed since January of 2020.
Price outlook
Seth Meyer is the chief economist of the U.S. Department of Agriculture. At the USDA’s 100th Agricultural Outlook Forum in February he told delegates to expect a continuation of the downward trend in commodity prices in 2024-25, with corn prices expected to fall 8.3 per cent this coming year. Wheat and soybeans are also expected to fall more than 10 per cent each. Input costs will continue to be higher, with the exception of falling fertilizer prices.
The average price expected to be received by producers is US$4.40 per bushel, down 40 cents from last year. The 2023 growing season had a large corn crop and we are starting this season with as much as 50 per cent higher inventory than last season. The USDA is estimating this growing season’s ending inventory to be the highest since 1987-88. South American production will also play a part on keeping corn prices lower this coming year with its increasing acreage and yield and its crop available sooner than North American producers’. These factors will obviously weigh on Canadian prices as well.
For growing conditions, the Weather Network tells us El Niño is beginning to dissipate, making room for La Niña to emerge. El Niño means warmer and dryer weather for the northern U.S. and Canada whereas La Niña brings cooler and wetter temperatures to our region.
Overseas, corn production in Ukraine is expected to be 30.5 million tonnes, up 13 per cent from the previous year but down 9 per cent from the five-year average before the Russian invasion. NASA Harvest, NASA’s Global Food Security and Agriculture Consortium, estimates 7.5 per cent of Ukraine’s cropland is now abandoned because of the war. Ukraine produces about twice the volume of corn as we do in Canada each year.
Brian Donovan, CBV, is the president of StockCalc, a Canadian fintech based in Miramichi, N.B.
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