Corn – Procurement Best Practices & Sourcing Strategies

DESCRIPTION

Corn Market Global Size:

In numerous regions of the world, corn is used as a fundamental grain in several industries and households since it is a main source of nutrition for people and animals. This grain has multiple notable uses, when it’s fresh, it can be consumed as a salad; when it reaches maturity, it can be harvested as a crop. Thus, this versatility caused a global crop market total production of 1,161 MMT and consumption of 1,170 MMT in 2022-2023 as per ELINT Market Research’s procurement intelligence report.

Furthermore, corn’s great genetic variation enables it to be adapted to a wide range of environments and farming techniques. Hence, the corn industry’s global ending stock recorded at 298.4 million metric tons in 2022–2023 ensures a constant supply of the products. Also, some producing countries experienced significant ending inventory for corn in the same year including the U.S. at 31.54 MMT, China at 206.12 MMT, and Brazil at 7.25 MMT.

Moreover, weather situations have a massive impact on the farming of corn; these nations showcased favorable temperature conditions during the forecasted time for harvesting and helped in positive production outcomes. Consequently, the leading corn-producing nations’ pleasant weather patterns are essential for preserving and growing the world’s corn supply, which would stabilize the market.

Market Definition:

Corn belongs to the grass family, which is a nutritive grain and helps fulfill animal and human food requirements. It works as a primary component in multiple products like popcorn, corn sweetener, cornstarch, and several other food items. Thus, the agricultural, food, pharmaceuticals, and cosmetics sectors are key consumers of this grain to build diverse products. Additionally, corn has seen strong demand in the food and beverage industry in the United States; its output has expanded dramatically, and it is one of the largest and most common food crops globally.

Corn Market Drivers:

1. Hike in the Chinese Livestock Industry Demands –

The regional consumption of meat, dairy products, and animal feed has risen sharply in China, which causes higher demands in the global corn market.

2. Growing Population –

The increase in population created a massive requirement for corn products since it is a key source of food items for humans and animals.

Corn Market Challenges:

1. Ukraine-Russia War Crisis –

Ukraine-Russia war conditions impacted the supply dynamics of corn goods in the world. Also, a lack of fertilizers has been detected due to this challenge which is crucial for maximizing corn yields.

2. Volatility in Corn Prices –

Another major challenge in the corn market is diverse corn exporting and producing countries undergoing extreme competition and the volatility in corn costs.

Corn Market Opportunities:

1. Emergence of Modern Technologies –

CRISPR gene editing is a modern and prominent technique in the global corn procurement intelligence market that helps resistance from nuisances, diseases, and unfavorable weather conditions.

2. Suitable Trade Policies –

The introduction of trade standards and policies helped to make suitable agreements between corn-producing and consuming provinces. These policies help stakeholders reduce trade barriers and foster long relations.

Corn Market Segmentation:

1. Different Sources –

Organic and conventional are two significant sources to produce corn. The organic way includes farming corn without using artificial pesticides or fertilizers. Further, conventional farming methods help in elevated harvests and inferior production costs.

2. Corn Applications –

Noteworthy applications of corn include food, beverages, personal care, animal feed, and ethanol production. This segmentation helps manufacturing companies offer corn goods depending on consumers’ particular requirements.

Regional Analysis of the Corn Market:

Multiple countries assisted in the international corn market’s production, supply, and demand dynamics and owned substantial percent shares. In this context, major corn-producing regions include the US at 32 percent, China at 23 percent, and Brazil at 10 percent. Further, when it comes to consumption rates, key countries include the US at 27 percent, China at 25 percent, the EU at 7 percent, Brazil at 6 percent, and Mexico at 4 percent. Moreover, several nations fulfill higher demands of corn in the world which include the US at 31%, Argentina at 19%, Brazil at 21%, Ukraine at 17%, and Russia at 2%. Also, the report predicted that Ukraine appeared as the primary corn supply economy from 2015 to 2022. Additionally, countries that depend on other nations to import corn goods include Japan at 11 percent, Vietnam, China & South Korea at 8 percent, and Egypt at 6 percent.

Trade Tariffs in the Corn Market:

The U.S. encountered a 54.33% trade tariff from China for export duty and a tiniest 0.19% for import tasks. Further, trade tariffs between the US and Argentina calculated a 7.60% export and zero import responsibilities. Similarly, Brazil underwent 54.33% export and 7.6% import when trading with China; on the other hand, Brazil nation experienced 424.4% export and 7.60% import when it was making trade tariffs with North Korea. These tariffs are a reflection of the intricate landscape of e international corn trading patterns.

Cost Drivers, Engagement Models, and Benchmark Price Indices in the Corn Market:

Two major cost drivers that help global corn procurement intelligence companies decide pricing structures for their goods include fertilizer costs with an increase of 25 percent and labor & and land costs. Further, a key corn-consuming country U.S. mainly employed labor and land cost drivers that underwent a 4–5 percent increase and helped companies decide price layouts. Moreover, when it comes to prominent engagement models in the corn industry, a 3-6 months long agreement emerged for stakeholders which is generally based on the Chicago Board of Trade (CBOT) pricing plus a foundation. Additionally, purchasers and suppliers can lock December-May timeframes as the best trading months for corn trading. Further, CBOT and MATIF Euronext are the most utilized benchmark price indices in the international corn sector.

Key Suppliers in the Corn Market:

Some of the key suppliers in the corn market include Archer Daniels Midland (ADM), Cargill Inc., Ingredion Inc., Tate & Lyle Plc, Roquette Freres, and Tereos SA.