Does corn continue to rise after the holiday?

This week, the corn market was affected by the news of increased storage, and prices rose strongly. The purchase price of northern ports was 2050-2070 yuan/ton, with a water content of 15 and a bulk density of 700 yuan, an increase of 70 yuan/ton from the previous low point; The average price of deep processing in Shandong has increased by about 73 yuan/ton, and the price has returned to over 2000 yuan/ton; Grassroots prices have generally increased by 30 yuan/ton or more; Dalian corn futures main 2505 contract rose 2.64% in the week, approaching the 2300 line. The market sentiment is heating up, the wind direction is rapidly changing, and there is a strong bullish sentiment after the holiday. The author also expects a volatile upward trend after the holiday. The center of gravity of corn has shifted upward, and the downward pressure or price pressure to return to the previous low is relatively small. So what is the potential for an increase after the holiday?

Policy guidance, prices continue to rise

Since the second increase in storage, two regions, Heilongjiang and Inner Mongolia, have been announced, and due to the approaching Spring Festival, some warehouses have announced that they will resume purchasing after the end of the year. For example, the direct warehouse of Heilongjiang Fujin will suspend corn procurement work on January 24th. After the Spring Festival holiday, the specific procurement time will be announced according to the actual situation; Liaoning Daxing Warehouse temporarily suspended acquisitions at 17:00 on January 23 and resumed acquisitions at 8:00 am on February 6. However, the market enthusiasm has been ignited, and the current high level of futures has greatly increased the market's confidence and confidence in the future. For example, the contract price of the northern port in February is 2100 yuan/ton, and the contract price in March is 2120 yuan/ton, increasing month by month. It should be noted that in the past two years, due to poor market conditions, the contract prices given by the market in the near month were sometimes the same, with only a 10 yuan/ton increase in the far month. However, currently there are more futures premiums and spot prices, and some companies that do futures cash hedging and basis point pricing can see larger profits, and their quoted prices are also higher than those of some companies that only do trading.

The progress of grain sales is accelerating, and channel inventory continues to increase

Since New Year's Day, some traders have been building inventory, but due to weak price increases and the impact of price declines in the previous two years, most of the traders who have built inventory are also doing their best and reducing the use of third-party funds with higher interest rates. However, this week there has been a 180 degree turn in attitude, with a high enthusiasm for building warehouses and a slow rise in the price of grain. Taking Heilongjiang as an example, the purchase price of 30 water of grain has roughly reached around 1500-1580 yuan/ton, and the theoretical discounted price of 15 water is between 1863-1963 yuan/ton. Currently, most regions have made more than half of their grain sales progress, with only 20-30% of surplus grain left for regional farmers. Grain sources are accelerating their transfer to channels, and traders feel like they have "no grain" while collecting, which has also intensified the market's bullish mentality.

In summary, it can be seen that the recent trading logic in the market is partly based on the reflection of forward expectations, and partly on the continued support and impact of policies after the year. For all parties involved in corn grain storage, concerns may arise about when the decline will stop, how much more can it continue to fall and whether it can still rise, how much room there is for further increase, and whether the increase can outperform the cost and interest. The author believes that from the current market quotations, taking northern ports as an example, the price of around 2150 yuan/ton is not a big problem. However, after the year, it will depend on whether the upward trend slows down and there is a slight correction or whether it continues the strong and unchanged trend from before.