Seed Corn Prices
Elements That Make Corn Prices Fluctuate
Every year, you notice considerable changes in your corn prices. But you can’t figure out why these changes occur so sporadically. That’s because seed corn prices are affected by a broad array of different elements. Many of these aspects may be things that you wouldn’t expect or could be hard to understand without a little research. So read on to learn more about these factors.
While it might not seem like oil and corn would be connected, that is not the case. As a result, seed corn prices often vary based on the cost of crude oil. Fully understanding these factors is critical to understanding why your value goes up and down without any reason. Oh, there is an influence here: it’s just not one that you might notice right away and which is hard to predict.
The connecting factor here can be summed up in one word: ethanol. For those farmers not familiar with this term, ethanol is a type of fuel additive that goes into gasoline. It helps to make it cleaner and minimizes greenhouse gases as much as possible. As you can imagine, this means that the supply and demand of corn often match or at least changes according to that of crude oil.
As a result, you can expect a direct correlation between crude oil and corn prices. When crude goes up, corn goes up as well. Likewise, changes in corn prices can be mirrored by those in oil. So if bad crops cause a shortage in corn that makes the price go up, you can expect oil to rise as well. This factor is confusing to many farmers but must be understood before planning a corn crop.
The Need for Ethanol
As mentioned before, corn is heavily influenced by the demand for ethanol. Around 40 percent of all corn demand comes for the need for ethanol. Interestingly, the demand for this product is rising around the world due to higher energy prices. Therefore, more countries are demanding corn, which is quickly driving up seed corn prices and other types of corn around the world.
That said, this factor can be separated from crude oil prices in many ways. For example, an increase in ethanol demand doesn’t just affect the 40 percent of corn used for this product. Instead, it can drive up corn prices all across the market. So supermarkets may find themselves struggling to buy corn or having to pay higher costs that are then passed to the consumers down the line.
Therefore, you need to pay attention to ethanol news to see just how your prices may rise and fall. For example, new developments in ethanol production may decrease the corn used in this product. Therefore, you may end up making less money because fewer of your corn shipments are used in this way. Confused? That is understandable because this element is rather complicated.
The “Chinese” Effect
World issues and various factors can affect just how much your seed corn prices rise and fall. These factors all depend on the countries and the areas putting pressure on you. For example, China has a huge demand for corn because it has become the most significant consumer and producer of energy in the world. As a result, they demand more and more corn to produce ethanol for their facilities.
This element is known as the “Chinese” effect and varies depending on many things. For example, President Donald Trump started a trade war with China that vastly increased the price of corn. These increases were damaging, though, because China imported less and farmers ended up getting hurt. As a result, high prices aren’t always the best for farmers in these situations.
Other factors, such as droughts in Europe, may also increase demand for corn and cause a substantial increase in prices. Interestingly, corn is usually directly tied to the economy – during good times, corn is valued high but drops in value during more robust economic periods. So pay attention to financial news to further understand how your corn prices are being affected.
The Constantly Changing Environment
Environmental factors are perhaps the most significant triggering change for seed corn prices. This fact probably seems pretty obvious to some but must be reported. First of all, cold weather can trigger a variety of damage to a corn crop in a heartbeat. When enough corn is damaged, a shortage may be declared. And if the supply is smaller than the demand, prices go up considerably.
The same thing happens when corn is affected by high temperatures. Heat-damaged corn is typically harder to sell, which may decrease prices. And if enough corn dies, prices will go up. This problem, in particular, is likely to happen with increasing rapidity. As the environment gets hotter and hotter, more and more heatwaves are likely to wipe out corn and cause many, many shortages.
Factors like these are among the most frustrating because they are the hardest to predict. While you might think that you could easily guess heat spells in the summer, this factor is harder than you’d think. Even worse, you might not know when winter comes or when snow is likely to damage your corn. So make sure that you pay very close attention to the weather to avoid issues.
Do You Need to Know More?
If you’re still confused about the factors that influence seed corn prices, please contact us at Online Seed Sales right away. Our experts fully understand how your corn prices change and what to expect when they do tweak. With our help, you can learn more about this process with relative ease.