The trend of corn prices may be 'suppressed first and then rising'

In September, new corn is about to be launched, but Chen corn inventory is still high. The significant drop in domestic corn futures prices has led to strong bearish expectations, causing some companies with high inventory to stop trading, resulting in short-term market oversupply. Special analysts from the Grain and Oil Market Report predict that corn prices may first decline and then rise in 2024/2025.

The domestic corn market futures for November fell to a minimum of 2177 yuan/ton, the lowest since September 2020. As of the close on September 11th, the corn 2411 contract closed at 2209 yuan/ton, with a cumulative decline of 129 yuan/ton or 5.5% for the month; The 2501 contract received 2227 yuan/ton, a decrease of 80 yuan/ton or 3.5% for the month.

It is expected that the spot price of corn futures in 2023/2024 will continue to decline, with a cumulative decline of over 500 yuan/ton. The corn industry chain, from planting to processing, is reflecting losses, and the market is generally bearish. Since August, international corn prices and feed grain prices have been at a low level, bringing sustained negative impacts.

In 2023/2024, there was a bumper harvest of corn in China, with imports of corn and its substitute grains reaching a historic high. The basic supply and demand of feed grains in China shifted from a supply-demand gap to a supply surplus. As of the end of July, according to customs data, the cumulative import of corn and alternative feed grains in 2023/2024 was 43.32 million tons, an increase of 16.4 million tons year-on-year, with a growth rate of 61%, the highest in the same period of history. The National Grain and Oil Information Center estimated in September that the surplus of domestic corn supply and demand in 2023/2024 would be 22.7 million tons. According to the special analyst of Grain and Oil Market News, in mid September, some new season corn has already been listed, and downstream processing and trading enterprises have insufficient enthusiasm for collecting and storing grain. The continued increase in supply has brought downward pressure to corn futures prices.

On September 11th, deep processing enterprises in the western region of Heilongjiang Province reduced their standard moisture corn purchase prices by 2200~2240 yuan/ton, Jilin by 2200~2240 yuan/ton, and Liaoning by 2250~2270 yuan/ton, with a weekly decrease of 20~40 yuan/ton and a monthly decrease of 30~50 yuan/ton. The national standard second-class corn for deep processing enterprises in Weifang, Shandong is priced at 2330-2350 yuan/ton, and in Binzhou it is priced at 2360-2380 yuan/ton. In Shijiazhuang, Hebei it is priced at 2270-2290 yuan/ton, and in Xingtai it is priced at 2290-2310 yuan/ton. In Hebi, Henan it is priced at 2260-2280 yuan/ton, and in Zhoukou it is priced at 2300-2320 yuan/ton. In most areas, the price has decreased by 20-40 yuan/ton compared to the previous week, and has increased by 10-30 yuan/ton month on month.

Currently, some corn in North China has already been listed, while some corn in Liaoning that has suffered from waterlogging disasters has been harvested ahead of schedule. The new Chen price has been adjusted accordingly, and the purchase price has significantly decreased compared to the same period last year. Moreover, the moisture content of new grain is high and difficult to store. The current market entities have low purchasing enthusiasm, and with the increase of listing volume, the downward pressure on prices has increased. In 2023, the corn production in Xinjiang will significantly increase, and the new season corn in Changji Prefecture has been launched. The purchase price of local processing enterprises has dropped to 1650 yuan/ton, a decrease of 80 yuan/ton from the opening price and a year-on-year decrease of about 700 yuan/ton.

Special analysts from Grain and Oil Market Report believe that with the expected decrease in imports of corn and its substitute grains in 2024/2025, demand will increase, and the supply and demand fundamentals may develop towards a tighter direction. Overall, corn prices may show a trend of first falling and then rising.