Inside Grains & Commodities
4 reasons for a low corn price
The maize quotation on the Matif in Paris is currently rising slightly, but over the longer term the quotation is showing a decline. What factors are driving this price drop?
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Choose the subscription that suits youAfter the corn price reached the highest level since 2013 (almost €200 per tonne) in August and September, the price recently fell sharply again. What causes that? Boerenbusiness listed 4 reasons.
1. The corn harvest appears to be good after all
The main reason for the decline in corn prices is that it turned out that the harvest of grain corn was not as bad as initially thought. On the contrary: the MARS report even states that grain maize yields are 8,4% higher than last year.
2. Harvest pressure in Ukraine
Secondly, the huge harvest in Ukraine puts pressure on prices. Because the corn harvest is so large and storage capacity is limited, there is a compelling supply. However, the feed industry in Europe is waiting to buy, in order to reduce the price even further. "Maize from Ukraine is interesting for the feed industry because the country is just around the corner and the maize is GMO-free," says a spokesperson for the Netherlands Enterprise Agency (RVO.nl).
3. Harvest pressure in the United States
The corn harvest is also large in the United States. However, the good yields do not correspond to the mediocre exports. Exports from the country are not running as smoothly as normal, because demand for the American product has decreased significantly recently. This has to do with stiff competition from South America and the Black Sea region. This has caused the price on the CBoT in Chicago to fall since October.
4. Less ethanol production
"Because sugar prices are very low, it is more interesting for factories in France and Germany to produce ethanol from sugar beets (instead of corn). This means that there is currently less demand for corn for the production of ethanol," says the spokesperson for RVO.nl. "The European Union's grain balance sheet shows that about 8% of corn goes to the ethanol industry, which could involve substantial quantities."
Rising price?
The above 4 reasons seem to argue in favor of a corn quotation that will not increase sharply for the time being, meaning that the product remains an attractive alternative for livestock farmers. Consumption of animal feed is therefore maximum, which will create additional demand. However, the price is so low that it cannot drop much further.