IndustryCorn trend: Month end 1.15, Year end 1.2
After entering this month, corn prices in North China and Shandong have begun to enter a bottoming out rebound mode, although the current mainstream price remains between 2050-2200 yuan/ton. But with the decrease in temperature, policy support, and the increase in downstream demand, there is a chance for corn to hit 1.15 yuan/jin at the end of the month, and the price is more likely to reach 1.2 yuan/jin before and after spring. Is this true? Regarding the rebound in prices in Northeast China, can there be a market of 1.1 yuan/jin before the Spring Festival?
Based on the current situation in North China and Shandong regions, there is still a high probability of a tail up market this month, mainly due to three reasons:
1. With the decrease in temperature, the circulation of grain sources in the market has decreased, and the willingness of grassroots farmers to ship has decreased. In addition, traders have begun to enter the stage of building warehouses, and the effect of channel interception has begun to emerge. In fact, the main reason is that the current prices are still somewhat low for most grassroots grain holders!
2. From a policy perspective, although large-scale storage operations have not yet been carried out in North China and Shandong, grain storage companies in various regions have started to make purchases, with prices generally above 1.1 yuan/jin, and the current acceptance standards are relatively low, which has a certain bottom line effect on prices. However, it must be said that currently, neither rotation nor storage has been fully launched, and it may even be delayed until after the New Year!
3. The temperature rise in downstream demand is mainly concentrated in the feed industry, coupled with the daily demand of deep processing enterprises. According to incomplete statistics, the monthly new demand in North China and Shandong is approaching one million tons. However, the market is currently in the late stage of concentrated market entry, with relatively sufficient supply and greater pressure for price increases!
Although there are three positive factors mentioned above, what I want to say is that if we rely solely on these factors, there is a chance for the entire North China and Shandong regions to hit 1.15 yuan/jin at the end of the month. However, my personal opinion is that the mainstream price will be between 2200-2300 yuan/ton. But the possibility of corn prices hitting 1.2 yuan/ton before the Spring Festival is relatively low. The main influencing factor is that the Chinese New Year came earlier this year, and there is a high possibility of a new round of grain sales in the market after New Year's Day!
Although the Northeast region is currently in a rebound stage, the strength of the rebound is also relatively small, and it is more of a trial by enterprises. As we mentioned earlier, the bottom line price of Chaozhou grain in the Northeast region is around 0.75 yuan/jin, and currently Heilongjiang has basically reached it. Jilin still has room for decline. As for the price rebound, the biggest factor is weather. However, this year's temperature is generally higher than last year, and weather forecasts show that there will be a temperature rebound this week. The pressure to preserve Chaozhou grain is still high. In addition, this year's stacked grain is lower than last year, and nearly half of the farmers still choose to actively produce grain, mainly because they have been scared by the market in the past two years!
Although there are indeed policies in the Northeast region to acquire and store land, the effect of profit growth is average, and there is a serious lack of follow-up actions. Coupled with a series of local grain storage investments, the official acquisition and investment comparison is somewhat insignificant. So now analyzing the official attitude is a bit conflicted. They want to maintain the bottom line price of new grain while also suppressing the profit margin of channel merchants. Based on the current listing situation, the biggest possibility for the Northeast region before the end of this month is to enter the final stage of the entry of trendy grain into the market. Next month, the price will enter a period of fluctuation and rebound. However, the personal opinion of the editor is that the current conditions are not ripe for the price of 1.1 yuan/jin to rebound. Follow up on policies and the entry of new grain into the market. For traders and drying towers, now is a good opportunity to build a warehouse, or they can take a chance!
Regarding the issue of Northeast grain entering the country, my personal opinion is that the current conditions for large-scale entry are not mature, and the profit margin for north-south transportation is not significant. If Northeast grain wants to move south on a large scale, it will have to wait for prices to rise in North China, Shandong, and southern regions. Based on the current supply situation, it is difficult for Northeast China to experience a large-scale procurement wave before the Spring Festival, and the price trend is basically set!
Summary: Based on the current supply and demand situation, there will not be a new round of price reductions (large-scale) in the corn market for the time being. The main reason is the self adjustment of prices by enterprises. After entering this month, due to various factors, the general trend of corn prices is basically clear. Before the Spring Festival, Shandong enterprises are likely to maintain a price of around 2200-2300 yuan/ton, and the overall price in Northeast China will remain between 2000-2200 yuan/ton. The situation of mixed long and short positions this month is destined to be dominated by buyers. In the future, the focus will be on weather changes, policy collection and storage situation, and enterprise start-up and stocking situation! As for the demand for feed, although there has been a rebound, it falls short of expectations and has little effect on the rise of new corn prices! Focus on changes in grassroots grain sales sentiment, intentions of trade and downstream enterprises to build warehouses, and policy trends. It is recommended that relevant trade processing entities rationally consider the phased price adjustments during the initial stage of new grain listing, and should not blindly bearish on the future market. When the price is appropriate, they should collect and store more.
Recently, more flour milling companies have been making minor adjustments. As we mentioned earlier, before the Spring Festival, wheat prices were in a state of "top and bottom", and there was basically no chance of significant fluctuations. After entering winter, flour is about to enter the peak consumption season, which has a strong upward effect on wheat prices. The current wheat market can be said to have more positive than negative news! The overall supply situation in the wheat market this year is relatively loose, and there have been no significant stages of market trends since the introduction of new wheat. Enterprises have also seized the weakness of cautious grain holders and started to continuously lower prices. However, considering the current market conditions, the supply-demand game in the wheat market before and after the Spring Festival is more obvious, with prices mainly fluctuating within the current range, and the possibility of a sharp rise or fall is extremely low!
In the coming period, fluctuations are inevitable, but the bottom line of prices is constantly being raised. Grain holders' confidence in wheat has also been restored. Regarding the current market, I would like to say two points. Firstly, according to research, some flour milling enterprises do have a shortage of inventory and need to replenish their inventory. Among them, Wu Deli has shown more obvious performance. However, those small and medium-sized flour milling enterprises, constrained by financial problems, are unlikely to build large warehouses themselves. Secondly, with the passage of time, the market circulation of grain source areas is stable, and there is even a downward trend, which is conducive to the stability and strength of wheat prices. After all, wheat has an official minimum protection price, and now there are rounds of grain storage in various regions. Entering the stage, prices are unlikely to collapse easily, but if wheat wants to truly experience a significant increase, I'm afraid we'll have to wait until we enter the next cycle - New Year's Day and Spring Festival!
