Corn crisis: Manufacturers prepare for price hikes as global stocks fall

Global corn stocks have hit a record low and supplies keep falling, with ING analysts predicting a further tightening over the current 2024/25 season.

“Global ending stocks this season are estimated to fall by a little more than 10mt YoY to 304mt,” says Warren Patterson, head of commodities strategy at ING.

On top of that, early forecasts suggest global corn stocks will edge down towards 290mt next season (ING).

Why are corn stocks falling?Global corn output is expected to fall by 9.7mt year on year, with declines predicted in the US, EU and Ukraine. These declines are driven by weaker yields, across all major supplier countries, resulting from severe weather events.

Corn is a heat-sensitive crop, and rising global temperatures are placing it under severe stress. On top of that, lower selling prices have forced some farmers to shift away from growing corn, in favour of more profitable options like soybeans.

Global corn stocks are down due to smaller growing areas and lower yields. (Image: Getty/ghornephoto)Corn essential to European F&BCorn features in a huge range of European food and beverage products, with breakfast cereals and snacks ranking highest.

Between 2020 and 2024, 6% of all European food and drink product launches contained corn starch, 4% contained corn flour, 3% contained modified corn starch, and 2% contained corn (Mintel).

“It is a staple food for many people and helps to feed a growing world population,” says Carol M Kopp of Investopedia. “It’s also a major component of livestock feed.”

And such is its importance that more corn is grown throughout the globe than any other grain crop.

Corn is used in a wide range of food and beverage products, including breakfast cereals. (Image: Getty/Rouzes)Will corn prices rise?Despite the global corn market tightening, prices have so far remained relatively stable, with analysts predicting it will remain this way. However that stability is dependent upon supplies recovering before demand begins to outstrip supply.

And early signs appear positive, with early estimates for Europe’s biggest producer, Ukraine, suggesting that the area in 2025/26 will increase by around 7% YoY. This larger area, coupled with yields in line with the five-year average, would mean that Ukrainian corn output would reach 30mt, up almost 15% YoY.

However, crop success will depend upon favourable growing conditions for corn.

Furthermore, the versatility of corn, used to produce a wide range of food, fuel and industrial products, means competition for available grains will be high, which could force prices to spike.

In fact, experts are already predicting a shift from corn to other ingredients to mitigate the risk of price rises.

“In launches like tortilla chips, popcorn, and corn-based breakfast cereals, where corn is the main ingredient, producers may “encourage” consumers to shift towards alternatives made from rice, potatoes, or wheat,” says Emma Schofield, associate director of global food science at Mintel.

And reformulation could be on the cards for manufacturers, with price rises driving demand for alternative thickening agents, such as starches from other sources including potatoes. Though the complex properties of corn starch would make it a challenge.

All this is making manufacturers nervous, with ING’s Patterson noting, “the market will be paying closer attention to 2025 spring planting prospects”.

Corn is the primary ingredient in a range of food products, including tortilla chips. (Image: Getty/rudisill)EU insists corn stocks safeDespite concerns, the European Union is keen to reassure manufacturers and consumers that corn supplies are safe.

“Currently, there are no concerns regarding maize (corn) availability within the EU,” said a European Commission official, when approached for comment. “Despite a structural deficit and relatively low domestic maize production over the past three seasons, the grain supply is considered sufficient.”

Though they did concede that prices had risen, saying that, “currently EU prices, which are aligned with global price trends, are slightly higher than they were last year.”

Interestingly, the Commission went on to mention the European Food Security Crisis preparedness and response mechanism (EFSCM) saying, “the EU has a contingency plan for ensuring food supply and food security in times of crisis.”

This raises the question of whether the European Union is more concerned about the situation that it is prepared to publicly announce.