Why is corn valuable?
Corn is a grain from Central America. Besides the fact that it is a source of food for humans and animals alike, it is also a very important ingredient for producing biofuels. It goes beyond the production of rice and wheat and therefore corn plays a crucial part in the world’s economy.
The way corn is grown is not rocket science. Corn is a family of gras and grows in different climates and locations, all over the world. There are six variations to corn, but all grown the same. The seeds are sewn a few inches under the earth. The seeds will germinate after about 5 to 12 days. The corn variety and temperature of the soil influence this process.
When the seeds have germinated, they develop small leaves. The leaves look like grass. They develop thicker stems and pointy leaves as they grow. The stems can become up to 4.5 meters tall. As soon as the stems have reached about two thirds of their complete height, they start reproducing through pollination in the wind. The rows that you can see in corn fields are usually meant to make pollination work better. This way the female flower can reach the neighbouring plants much easier.
After the corn has fully grown, it can be harvested. The timing of this has a huge impact on the taste. If you harvest it in the early phases, it gets a pretty sweet flavor. If the corn gets harvasted later on, the rich starchness on the inside is noticable.
Different types of corn
As mentioned earlier, corn has six variations in which it can be produced:
- Sweet corn: Naturally a sweet variety that gets harvested before riping
- Dent corn: Known as field corn, about 99% of US production consists of this
- Popcorn: The hard outer shell and the low starchness is typical for this type
- Peel corn: Mainly harvested for decorative purposes
- Flour corn: The oldest varient with a soft starchness
- Flint corn: This variant has a glasslike outer layer and is mainly harvested in Central and South America
Countries producing corn
Corn knows many applications, but surprisingly enough, the most important one does not involve food for humans. It is namely fact that about two thirds of all corn goes to feed for livestock or ethanol fuel. The United States being the main supplier for this.
But corn is also used for many other things:
- Livestock feed: 95% of US production is meant for this
- Ethanol: Corn is the main raw material for the production of ethanol
- Corn syrup: With high fructose
- Corn starch: To thicken sauces for example
- Grains: Cereal usually contains corn
- Alcoholic drinks: Some booze like whisky are made with corn
- Many others: A wide variety of everyday itmes like plastics, batteries, deodorants, diapers, matchsticks, carpets, coloring pencils, glue and more.
Reasons to invest in corn
All traders or investors have different reasons to invest in corn, but there are a few that get repeated a lot:
- Increased demand in China
- Inflation coverage
- Diversification of portfolio
Corn has a lot of options to choose from when it comes to investing. It is always good to do your own research and learn more about the investment you are making and the risks it brings. Corn has a lot of potential, but there are also some downsides to it. So read the next paragraph well and make sure you understand the investment.
The use of biofuels will most likely increase the upcoming years. By investing in corn, you will have found a way to lift off this trend. Over 60 countries, among which a lot of the European Union, have multiple goals for the use of ethanol. This will probably only increase more, because the world is looking for cleaner energy sources.
The increased demand from China for corn
The target which is set by China itself, is that they want to increase the use of biofuels in the upcoming years by a lot. The country has over a billion people to serve. Because of the growing wealth in the country, more mouths need to be fed. Because of the growing wealth there is an increase in consumption of meat. This means more livestock, which needs more feed like corn to keep up with the demand.
Trading in a raw material like corn is a good way to protect yourself from inflation. Agricultural goods like corn, oats and so on, will get more expensive, if the world economy gets inflated. It is a base form of food and will always be needed.
Diversification of portfolio
By spreading the risks in your porftolio, you diversify it. It is always to keep in mind, the risks of trading in corn. Think about the thriving green energy sources like solar, water and wind energy. This could lead to a decrease in biofuel demand, which has an impact on the corn price.