Obviously, corn is one of the major food commodities in the world. In many parts of the globe, corn is a major foodstuff and fodder. Farmers living in such areas expand their corn acres regularly in order to make up for the increasing demand. According to several official sources, the annual global corn yield is somewhere around 950 million tons, which makes corn the leader among other crops.
The USA is the world’s major corn producer and exporter (about 1.3 of the total global yield). The USA is followed by China, Brazil, the Eu and other countries.
Corn is a commodity traded at CBOT. As of November 15th, the December futures session closed at 422 USc/bu. The last time, the corn futures traded below 500 USc/bu was in 2009 right in advance of a strong rally. The rally skyrocketed to 849 USc/bu in August 2012 and has been declining and trading in the wide price range ever since.
According to the Commodity Trading Department of Masterforex-V Academy, the downtrend is connected with excessive production worldwide. The supply is definitely dominating the demand at this point.
The latest report published by the USDA on November 8th, shows that the corn market is seen a wider imbalance between the supply and demand, which leads to higher oversupply. This is definitely a bearish factor for the market.
Bearish Factors
In particular, the global production in the 2013-2014 marketing year is expected to rich another record – 962,83 million metric tons, which is 100 million more than last year. The US harvest is expected to reach 355 million.
The global consumption forecast has seen a minor increase from 927.84 mmt up to just 933,36 mmt.
Bullish Factors
At the same time, there are some factors that support the price of corn. In particular, cheaper corn becomes more attractive to consumers, thereby stimulating consumption. The November report showed increased global export figures – from 102,7 mmt up to 110,9 mmt.
The Brazilian export of corn has hit another record this year – 20,8 mmt.
Trading Recommendations
The global market of corn presents no interest to option sellers at this point.
