Corn makes up between 60%-70% of most finished feed ration and other feed ingredients prices are often determined based on the underlying value of corn. The volatility in the price of corn therefore has major impacts on feed prices based on the following factors.
The corn market is a highly sensitive and dynamic market that is influenced by a variety of factors, including weather patterns, market demand, and global trade. The spring and summer months are especially critical for the corn market, as this is the time when farmers are planting and cultivating their crops, and market fluctuations can have a significant impact on their bottom line.
One of the primary factors that influence the corn market during the spring and summer months is the fear of a lack of moisture. Corn is a water-intensive crop, and if there is a shortage of rainfall or irrigation during the growing season, it can lead to a reduction in crop yields and lower quality corn.
Farmers and traders closely monitor weather patterns, soil moisture levels, and forecasts in order to anticipate any potential disruptions to the corn market. If there are concerns about a lack of moisture, it can lead to increased market volatility, as traders try to price in the potential impact on crop yields and the supply-demand balance.
In recent years, the fear of a lack of moisture has become an increasingly important factor in the corn market, as climate change and extreme weather events have led to more frequent and severe droughts. As a result, farmers and traders must be vigilant and proactive in managing the risks associated with these weather-related fluctuations in the corn market.
Global trade - World Supply and World Demand thoughts...The Russian invasion of Ukraine had a significant impact on the US corn market. The conflict led to a disruption of global trade, as sanctions were imposed on Russia and retaliatory measures taken by Moscow. This had a direct impact on the US corn market, which is heavily dependent on global trade.
Ukraine is a significant player in the global corn and grain production market. It is one of the top ten producers of corn in the world, with an annual production of around 30 million metric tons. Additionally, Ukraine is a major exporter of corn, accounting for about 20% of the global corn trade. The country's fertile soil and favorable climate provide ideal conditions for growing corn and other grains. The importance of Ukraine's corn production has been highlighted by the Russian invasion of Ukraine, which has disrupted global trade and created opportunities for other major producers like the US and Brazil. Therefore, Ukraine's role in global corn and grain production cannot be understated.
Russia is a major producer and exporter of wheat, corn, and other agricultural commodities. The sanctions and trade restrictions imposed on Russia led to a reduction in its exports, which in turn created opportunities for other producers, including the US. However, the uncertainty and disruption caused by the conflict led to increased market volatility and price fluctuations.
- Tom Fanning