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The ongoing revival in global demand growth together with constrained global supply means that the price of corn is likely to hold onto most of its recent gains for some time. That said, strategists at Capital Economics think that the corn price will fall in 2022 as demand growth in China slows and global supply rebounds.

Corn price rally to run out of steam

“We expect the price of corn to hold up well for the rest of this year as the global market remains in a sizeable deficit, which will lead to a further drawdown of global stocks.”

“We think that prices will fall in 2022 for two key reasons. First, we expect demand growth in China (the world’s second largest consumer) to slow. Second, global supply should rebound soon. For one, the recent end to the La Niña should lift corn yields, particularly in Latin America. In addition, the rally in corn prices should incentivise farmers to plant more corn at the expense of other food crops.”

“We expect that the deficit in the global corn market will narrow in 2021/22, which should alleviate some of the downward pressure on stocks. Accordingly, we now forecast that the price of corn will fall to 550 and 450 US cents per bushel by end-2021 and end-2022, respectively, from around 600 US cents per bushel currently.”