Corn is one of the most valuable commodities on our planet being used for feeding livestock, for human consumption, for Ethanol production, and many more. In fact, corn is the most produced crop in the world and some might say that it is the most important crop in the world. Corn, also known as maize, represents the most basic need of humans; the need for food, and therefore, grains will always remain a necessity product, in particular in times of uncertainty and natural disasters.
Besides the great benefits of corn, the commodity is tradable on futures exchanges and is used by day traders as a speculative tool. Corn is highly affected by seasonality, harvest, production and consumption, extreme weather conditions such as droughts, geopolitics, prospective plantings, and storage.
In this guide, we will provide you with the most essential information about corn trading. We will outline how the corn market works, what are the best brokers out there that offer corn trading, and how to get started.
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How to Trade Corn in 4 Quick Steps:
Corn is being traded all over the world, however, trading corn futures was originated in the United States. As a matter of fact, the first contract on the Chicago Board of Trade (CBOT) was written on March 13, 1851, and was a corn contract.
Although the traditional way to trade corn is via futures exchanges, the evolution of financial markets has created new effective ways to trade corn. While trading corn through futures exchanges requires a long account creation process and high commissions, trading corn on CFD’s online trading platforms is the ultimate way to get access to the market. Simply follow the steps below to get started.
Step 1: Open a Trading Account
Open a free trading account with our recommended broker. As part of the registration process, you will be required to submit your personal details for KYC.
Step 2: Deposit Funds
Once you have completed the registration and your account has been approved, you can transfer funds to your account by one of the provided payment methods.
Step 3: Demo and Live Trading
Begin trading on a demo account. A demo account allows you to trade in real-time but also learn about the mechanics of corn trading and understand basic terms.
Step 1: Open a Corn Trading Account
Finding a brokerage that connects you to the futures market is doable but requires a complicated verification process in which you’ll have to submit many documents and download a trading platform that is supported by the broker. Even before that, finding a broker that supports corn futures is a work on its own and the fees charged by the broker are quite high (a minimum of $1.95 per side).
But here’s another way to trade corn. If you are not a farmer or a producer who has a need to physically purchase corn, then you might want to consider speculating on corn’s prices through the CFD market. The CFD market is basically a derivative market where a broker connects you with other participants in order to speculate on the price of security without owning it. The CFD market is considered as a bit riskier than traditional trading mainly due to the leverage offered by CFD brokers, however, if you find the right leverage balance and you simply try to speculate on the price of corn, then it is a great way to enter the market.
At the time of writing, not all CFD brokers offer corn trading but we have listed two top-regulated brokers that offer corn CFD futures.
1. Plus500 - Trading Platform for Experienced Users
Plus500 is the most well-established broker that offers corn trading in the CFD market. Looking at the corn contract specification, Plus500 charges a spread of 0.63 and enables you to trade with a margin of %5. The broker delivers the closest futures contract of corn, which often is also the contract with the highest trading volume.
Plus500 offers a well-designed web-based trading platform which is ideal for beginners. Furthermore, the broker is authorized & regulated by the FCA and highly regulated by the Australian Securities and Investments Commission (ASIC), and the Cyprus Securities and Exchange Commission (CySEC).
- Plus500 offers a high leverage ratio of up to 1:20 for corn trading
- Competitive spreads and low fees
- Plus500 doesn't support MetaTrader platforms
- Plus500 charges an overnight fee for corn futures
- Plus500 forbids scalping and hedging and does not offer signal or social trading
2. AvaTrade - Best Corn Trading Platform for Experienced Traders
Unlike Plus500, AvaTrade has a selection of web-based as well as desktop-based trading platforms that include the popular MetaTrader4, MetaTrader5, and its own proprietary platform. In terms of corn trading, the broker offers a leverage ratio of 1:10 for retail clients and a leverage ratio of 33 for professional traders.
AvaTrade is well-known forex and CFD broker operating since 2006 and is regulated by top financial authorities that include the Central Bank of Ireland, ASIC, BVI, CySEC, FSA, ADGM, and FSCA.
- Low spread of 0.25 pips for corn trading
- A leverage ratio of 1:10 for retail clients and 1:33 for professional traders
- AvaTrade offers traders to trade with the MetaTrader4
- Charges an overnight fee
- AvaTrade is not available in the United States
Step 2: Learn How the Corn Market Works
What is Corn?
Corn is an extremely valuable commodity for everyday life and is used primarily for food products, ethanol, biofuel, and livestock feed. The cereal grain has been first domesticated in Mexico about 10,000 years ago and till these days remains a vital grain for various reasons.
Corn grows in different climates and areas around the world, and its harvest seasonality is one of the most significant factors to determine its price fluctuations. The main producing countries of corn are the United States, China, Brazil, Argentina, Ukraine, and India. The top consuming countries are the United States, China, Brazil, Mexico, Japan, and India.
How the Corn Market Works
Unlike other complicated securities such as stocks, bonds, and currencies, which can be difficult to understand, commodities are easily understood. And like any other instrument, the main factor that affects corn’s price is demand and supply.
The Chicago Mercantile Exchange (CME) is the benchmark exchange that offers corn contracts for the following months: March, May, July, September, and December. Other notable exchanges that offer corn futures are the Tokyo Commodity Exchange (Tocom), and Euronext. Corn futures contracts usually measured in bushels and have a tick value of $12.5 (every tick of 0.25 worth $12.5) and a contract size of 5,000 bushels.
The price of corn is affected by correlated and uncorrelated factors. Those include the production and consumption of corn, production and consumption of ethanol, exchange rates (mainly US dollar) that affect imports and exports, oil prices, weather conditions, global economic growth, the amount of storage left for each country, and the Chinese demand.
Whenever you decide to start trading corn, there are some ‘must-have’ websites, reports, and information you will have to check on a daily basis. Moreover, you’ll have to know the exact day in which the USDA report is being published and the seasonality patterns of corn. Here are some of the main reports, websites, and tools you should follow:
- The USDA Reports
- USDA Monthly Supply and Demand
- Feed Grains: Yearbook Tables
- US Corn Planted Acreage
- US Corn Crop Conditions
- U.S. Agricultural Weather Highlights – USDA
- CFTC Corn Speculative Net Positions
- CFTC Commitment of Traders Long/Short Report – Corn
- CFTC Corn Non-Commercial Net Positions
- The CBOE/CBOT Corn Volatility Index (CIV)
It’s important to note that the price of corn is quite fixed, largely by the demand of governments and industrial consumers. Looking at corn’s 59-years chart, you’ll be able to notice that corn’s prices range between $1-$4 besides the spike in prices during the 2011 draught.
Step 3: Choose a Corn Trading Strategy
Different from other tradable commodities, corn and other grains are not a mainstream commodity in which you will find its price on financial portals and news updates. That leads to the lack of guides and articles about corn or finding effective trading strategies and getting access to corn-related news. Here are some basic strategies and tools to help you get started:
Technical Analysis
Technical analysis is the most effective tool used by traders to analyze a specific market. The same applies to corn. Some of the most popular technical analysis indicators for corn trading include Moving Average (MA), Relative Strength Index (RSI), MACD, Stochastics, trend lines, and Fibonacci Retracement.
Fundamental Analysis – Market News, and economic data
As mentioned previously, you won’t find grains-related news on every site and news media platform. Grains are a bit of a ‘boring’ commodity, which can be the opposite of financial securities such as bitcoin for example. Yet, you will have to pay close attention to major news that relates to corn. Some top grains news sites include the World Grain, Agweb, and Grain.com. Moreover, you’ll have to follow the USDA and CME reports and be attentive to any change in corn/ethanol’s production, consumption.
The Grains Family – Wheat, Soybean, and Corn
Grains are a family of cereal crops that include wheat, corn, soybean rye, rice, oats, barley, etc. The most notable grains you should follow include wheat and soybean. Soybean and corn are usually rotated and are in a constant state of competition with each other. Nevertheless, you’ll have to follow the three commodities together and if possible, find any price anomalies. The three top grains often move in the same direction but occasionally, one of the grains makes the first/last move which can be a great trading strategy.
Seasonality/Corn Plantation
Like other commodities, seasonality plays an important role in corn’s price fluctuations. As you can see in the image below, corn’s prices tend to rise during April – October, and fall during October – March. Many traders use seasonality patterns in the same trades year after year.
The plantation of corn is made in rotation with other crops, in particular soybeans. Therefore, farmers have to decide the size of the crop they wish to grow at the beginning of the planting season (April or early May).
Corn-Soybean Spread
The corn-soybean ratio (spread) is not only very important for farmers in the United States, but also for day traders that are looking for successful trades. Simply put, the corn-soybean ratio is a tool farmers use to make this plantation decision.
If the ratio falls below 2.2 to 1, corn prices are historically expensive and therefore are expected to fall. When the ratio rises above 2.4 to 1, then soybeans prices are historically expensive and are expected to balance with corn prices.
Step 4: Open a Corn Trade
There are a few brokers that offer CFD corn trading. One of these brokers is Plus500, which offers an easy-to-use trading platform where you can easily trade corn contracts.
Once you have completed the sign-up process with Plus500, simply login to the platform and search for corn on the search box at the top of the screen.
When you click on the buy or sell button, a new window will pop up on the right-side of the screen. Set the amount of the trade, take profit order (close at profit), Stop-loss order (close at loss)and click on the Buy/Sell button.
Conclusion
Day trading corn is a different business than other widely-covered commodities such as gold, oil and natural gas. You’ll have to dig in order to find reliable data sources and understand the fundamentals of corn such as seasonality, plantation, and harvest time. Corn is a great commodity for scalping and spreads trading (corn-to-corn contract, corn-wheat, and corn-soybean), and often moves at a slow pace, though in volatile days you’ll find yourself asking for a second of calm. The USDA report that is released on a monthly and quarterly basis, provides a lot of information about the current status of corn’s production and supply in the United States and globally.
But after all, corn and other grains are best suited for those who have the patience and discipline to constantly conduct well research and form a long term trading strategy, whether it is a scalping, day, or long term position trading method.
FAQs
What are the trading hours for corn futures?
The main futures exchange in which corn futures are being traded in is the Chicago Mercantile Exchange (CME). Corn trading hours are as follows: Sunday – Friday, 7pm – 7:45am and Central Time and Monday – Friday, 8:30am – 1:20pm Central Time.
What is the market symbol for corn?
The ticker symbol for corn futures contract is ZC. The ticker symbol for a mini-corn futures contract is XC.
What are the main factors that affect corn prices?
Corn price is all about supply and demand. The main factors that affect corn prices include seasonality, weather conditions, storage and transportation disruptions, production and consumption, oil prices, and global economic status.
How much money do I need to trade corn?
If you decide to start trading corn through the CFD market, there's no need to invest a high capital. Due to the leverage offered by these brokers, you can deposit a relatively small amount. For example, Plus500 maintains a minimum deposit requirement of $100 and a leverage ratio 0f up to 1:20, meaning you can trade with a total amount of $2000.
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