In the current era, people saw a decline in the pricing pattern for maize or corn during 2020. But, even when we pace ahead in 2022, the price fluctuation still prevails in the market. So, in this article, we will cover the factors that determine the price of corn.

As you read through the article, you will also know more about why the price of corn is increasing in the maize market.

What Determines the Price of Maize or Corn?

Whenever the supply and demand functions are in sync with one another, the interaction can determine the overall price of corn. Moreover, some agricultural policies can affect the supply, demand, and price of commodities.

If the government is running some particular programs, it can affect the corn’s price to a certain extent. On the other hand, public stockholding by the government can also influence the price of maize. However, an individual can mitigate the risks through many market-based options.

These include future markets and insurance. If the farmer can’t afford to pay the insurance fees, he can think about saving money when the earnings are high. A bit later, he can use the reserves and meet the essential expenses. Besides, an analysis reveals that the maize market will have higher price volatility in remote markets.

Is there a Great Price Fluctuation in the Maize Market?

According to contracts for July, it was found out that the futures were presently trading more than $8 for every bushel. Many individuals record this observation as the highest level since 2012. The increase in the price is due to the war in Ukraine.

But, even before the war's onset, the economy's inflation was due to the high transportation costs and the disruption in the supply chain. Moreover, the increase in the price was also due to the drought in western regions of the US and many more across the globe.

Apart from the impact of the global supply concerns on agricultural commodities, there are also some reasons for the inflation rate. The condition is due to the hike in the price of many food commodities and corn. But, some economists and strategists are worried about a certain fact. They stated that if people try to slow down the inflation, the USA will have to go through a recession.

Now, when you’re still wondering why corn prices are high, it’s because of three main reasons.

● According to the new report by IndexBox, USA’s crop production will be more than the earlier year by 33% for the period between 2021 and 2022. But, as many regions have to bear the drought conditions, it will be tough to make up for the difference in production. Hence, the corn price can rise in the next months.

● Delays in planting crops are yet another reason for the price increase. So, when the USDA is looking forward to an average corn yield of 181 bu. For every acre, there will be a drastic drop in production. As compared to last year, the production is estimated to be reduced by 350 million bushels.

● The production of ethanol is also one of the factors that is influencing corn prices. But, people have not yet observed the ethanol margins moving to the negative side. In such a case, ethanol processors are still seeking bushels. While the ethanol plants are making something equal to 80¢, they will continue to bid aggressively for corn.

Summary

Many things determine the price of corn. The overall price will be due to the interaction between demand and supply functions. Consequently, many government policies and programs can also influence corn prices. But, this year, the maize price is higher because of the drought, delay in planting crops, and strong margins in ethanol production.