The continuous decline in corn prices is expected to improve the pattern of strong supply and weak demand after the launch of new grains

Since September, corn prices have been fluctuating at a low level, with negative factors such as high yields and low import prices for US corn. However, due to market expectations of loose supply being digested, futures prices have rebounded. However, domestic corn futures and spot prices continue to weaken, but analysts predict that the pattern of strong supply and weak demand for corn in China will improve before the grassroots level increases.

International corn supply easing leads to price decline, futures market rebounds

According to the latest report from the US Department of Agriculture (USDA) in September, the US corn outlook for this month shows a decrease in corn supply in 2024/25, with a slight decrease in ending inventory. Based on the increase in exports and corn used for ethanol in 2023/24, it is expected that the initial inventory will decrease by 55 million bushels in 2024/25. It is expected that the corn production for 2024/25 will be 15.2 billion bushels, an increase of 39 million bushels from the previous month, with a yield increase of 0.5 bushels to 183.6 bushels per acre.

Compared to the same period last year, both corn production and yield have increased. The estimated corn production for 2023/24 is 15.1 billion bushels, as the increase in harvest area is sufficient to offset the decreas

Zhang Xiaojun from Green Dahua Futures Research Institute stated that the current supply and demand pattern for corn tends to be loose. Zhang Xiaojun pointed out that there are two pricing logics for spot corn: one is the planting cost, and the other is the pricing of substitutes. Two pricing logics have led to a continuous weakening of corn prices. At present, the discounted port price of new grain is between 2100 yuan and 2200 yuan/ton, and the market has fallen to 2200 yuan/ton, with relatively limited room for decline. Another reason is that there are many alternatives to corn. According to the latest data released by the General Administration of Customs on September 10th, China's cumulative imported grain volume from January to August 2024 was 113 million tons, a year-on-year increase of 6.1%. These two pricing logics have led to a decline in the price of corn.

Regarding the future trend of corn prices and supply and demand patterns, Zhang Xiaojun predicts that the weakening of corn prices will improve after the new grain market is launched. In the initial stage of listing, some low-quality trendy grains or grains with storage problems will be sold first, and then the market will have a certain absorption sentiment towards high-quality and superior grains. After downstream enterprises and traders start to purchase, it will provide some support for corn prices. Zhang Xiaojun predicts that the listing time of corn in Northeast China will be moved to October this year, and the pattern of strong supply and weak demand is expected to improve before the quantity at the grassroots level.

e in yield. The national average yield is expected to be 173.8 bushels per acre, a decrease of 1.3 bushels. The expected harvest area is 87.1 million acres, with an increase of 800000 acres. The total amount of corn used in the United States remains unchanged at 14.4 billion bushels.

The total amount of corn used in the United States remains unchanged at 15 billion bushels. Due to a decrease in supply and unchanged usage, the ending inventory decreased by 16 million bushels to 2.1 billion bushels. The seasonal average corn price received by producers dropped by 10 cents to $4.10 per bushel.

According to the crop inspection results released by Pro Farmer, a subsidiary of Farm Futures magazine in August, it is expected that the US corn production in 2024 will be 14.979 billion bushels, lower than the USDA's August report expectation of 15.147 billion bushels, but higher than the crop inspection of 14.96 billion bushels in 2023.

From the perspective of the futures market, as the market has digested the negative impact of loose supply, overseas corn prices have also rebounded since September. As of the close on September 13th, December corn futures on the Chicago Board of Trade (CBOT) have rebounded significantly, trading at 413.75 cents per bushel.

Domestic corn supply is strong, demand is weak. After the new grain is launched, the situation of weakened prices is expected to improve

However, the domestic corn futures market continued to fluctuate and weaken. As of the close on September 13th, the main 2411 contract closed at 2200 yuan/ton, although slightly up, it fell by 68 yuan/ton compared to last week. According to the assessment of the China Meteorological Administration, since the planting of corn this year, the average climate in production areas across the country has been suitable, with more sudden floods and other disasters but limited overall impact, which is generally conducive to the growth and harvest of corn. In addition, the analysis of the supply and demand situation of agricultural products in China released by the Ministry of Agriculture and Rural Affairs in September shows that in the domestic market, new season corn has been launched one after another, feed consumption has steadily increased, the deep processing rate of corn has remained high, and the overall operation of the corn market is stable.