Corn and Starch Annual Report: Despite weak demand and strong expectations, there are still expectations for the corn market

Part One Preface Summary

Review of Corn Market in 2024:

In the first half of 2024, the supply of corn in North China was higher than last year, with more supply of brown rice and sprouted wheat, resulting in a record low price difference between North China corn and Northeast China corn. In the second half of the year, corn production will decrease, planting costs will decrease, and corn buyers will enter the market cautiously, maintaining low inventory. In addition, the new season of corn in 24 years has high mold and toxin levels, and corn spot prices will continue to decline, falling to a new low in 4 years. Due to the low prices of corn and by-products, starch enterprises have maintained profitability for a long time, and the price difference between spot starch and corn remains high. Corn futures have relatively small fluctuations, and the price difference between corn and starch is also in a narrow range of fluctuations.

Outlook for domestic and international market trends in 2025:

Internationally, the bottom of US corn has appeared, with strong support at 430 cents per bushel for 05 US corn. With increasing demand in the later stage, US corn may still rise, and the planting area of US corn will continue to increase in the 25/26 fiscal year. Brazilian corn exports have increased, but there is still room for growth in Brazilian corn production.

Domestically, the reduction in corn production in the new season has led to a significant decrease in the substitution of brown rice and wheat sprouts. Corn imports have tightened, and there is a strong expectation of a rise in corn spot prices. However, wheat prices will still suppress the increase in corn prices. The spot and futures markets for corn have seen a significant increase in premiums, resulting in a large amount of arbitrage funds for futures and spot trading. The cost of planting corn in the new season of 25/26 has decreased, and port prices will still fluctuate mainly around the cost line. Trading focuses on the selling pressure near the Spring Festival, the price difference between corn and wheat after the year, the tight corn situation in the third quarter, and the production and opening price after the new season's listing.

Strategy recommendation:

1. Unilateral: Enter the US corn 03 contract below 430 cents per bushel, with a target of 450 cents per bushel. Domestic 05 corn is expected to fluctuate between 2150-2300, with attempts to shorten below 2170.

2. Arbitrage: The price difference between corn and starch in 05 is fluctuating strongly at 340-420. Buy corn spot with a short market of 03 corn or 05 corn. North China can also buy spot goods and sell 07 corn.

3. Option: Sell c2305-c-2260. (The above views are for reference only and shall not be used as a basis for market entry).

Part 2 Review of Domestic Corn Market

The core of the 2024 transaction is North China corn. In the 23rd/24th fiscal year, there was an increase in corn production in North China, with a higher supply of sprouted wheat and brown rice. Coupled with higher levels of corn toxins and mold in North China, this resulted in greater pressure on the supply of corn grains in the region. However, due to the impact of swine fever at the end of 2023, demand in North China has decreased. Resulting in a low price difference between corn from North China and Northeast China, making it difficult to retain corn from Northeast China in North China. Due to the large amount of imported corn in the south, coupled with the import of barley and sorghum, the grain prices in the south are lower, resulting in a lower price difference between corn in the northeast and the south. In the past year, due to the unilateral decline of corn, traders suffered significant losses, and farmers also experienced losses. In August 2024, the loose supply of corn in North China and the large number of new season corn on the market lacked purchasing entities, and farmers' corn mold and toxins were higher than last year, resulting in a record low corn spot price.

1、 Excess domestic grain supply coupled with declining demand, resulting in a continuous decline in corn spot prices

In terms of futures: In mid January 2024, China National Grain Reserves Corporation increased its inventory and corn spot prices rebounded, with corn futures rebounding from a low of 2320 yuan/ton to 2480 yuan/ton and then sideways until the end of May. From the end of May to early December, the domestic grain supply was relatively large, but the recovery of demand was still slow. Coupled with the global grain price decline, corn spot prices continued to decline. After the new grain was launched, there was a lack of purchasing entities, and the price of corn continued to fall to a new low since mid-20th year. On December 5th, China National Grain Reserves Corporation increased its storage capacity and relaxed the storage of toxins to 1500, causing corn futures to stabilize and rebound.

In terms of spot goods: In the first half of 2024, due to the collection and storage policy in Northeast China, the spot price of corn in Northeast China was relatively strong. However, the demand in North China decreased, and the combination of high mold and toxin levels, as well as the impact of sprouted wheat and brown rice, led to a record low price difference between corn in North China and Northeast China, and even the phenomenon of Shandong corn equaling Heilongjiang corn. The closing price of Beigang reached its highest point of 2490 yuan/ton in early January and late June, and then continued to decline to the lowest closing price of 2040 yuan/ton on December 5th, a decrease of 450 yuan/ton. After December 5th, spot prices began to rise, and as of December 12th, they rebounded to 2090 yuan/ton.

2、 Review of Corn Starch Market and Trading Core

In 2024, due to the higher decline in by-products compared to corn, the contribution of by-products to starch factories was much lower than in the past five years. The contribution of by-products fell back to a lower level of 550 yuan/ton, and the profits of starch factories remained near the breakeven line. The spot price difference between corn and starch is at a relatively high level. Due to the still good demand for starch in the first quarter, starch companies had high profits at the beginning of the year. However, with the increase in operating rates and inventory, starch profits continued to remain around 0. The price difference between corn and starch 05 has fallen from the highest of 520 yuan/ton at the end of January to around 400 yuan/ton at the end of April, and the price difference between corn and starch 01 is also around 400 yuan/ton.

Part III International Corn Fundamental Situation

From a large cycle perspective, international corn will experience narrow fluctuations near the breakeven line for a long time due to sustained production growth. In 25 years, global corn will continue to fluctuate mainly. The area of the main producing countries, the United States and Brazil, may still increase, and prices will continue to rise in the first half of the year.

1、 Global corn supply decreased year-on-year, but planting area is expected to increase in the new season

The global corn production in the year 24/25 has slightly decreased compared to the previous year, with the international corn center of gravity rising and domestic imported corn profits declining. According to the December USDA report, global corn production was 1.218 billion tons, a decrease of 11.74 million tons from the previous year. The United States produces 384.6 million tons and exports 62.87 million tons; Brazil produces 127 million tons and exports 48 million tons; Argentina produces 51 million tons of corn and exports 36 million tons; Ukraine produces 26.5 million tons of corn and exports 23 million tons. Due to the international corn bottoming out and recovery, as well as significant losses in soybean planting profits, it is expected that the corn area will increase in the next 25 years, mainly due to the increase in area in the United States and the trend of increasing area and yield in Brazil.

2、 The ratio of corn to soybeans has increased, and the area will increase in 25 years

The cost line for 24/25 US corn is around 480 cents per bushel, and the US corn area is around 90.7 million acres, lower than last year's 94.6 million acres. US corn 03 rose from 400 cents/bushel at the end of August to a high of 450 cents/bushel in early December, but US soybeans continued to decline, falling below 1000 cents/bushel. The ratio of US soybean 11 contract to US corn 12 contract returned to 2.3, at a relatively low level. It is expected that the planting area of American corn will increase in the next 25 years, and preliminary estimates suggest that the planting area of American corn will be 92 million acres. It is expected that the US corn 12 contract will still be at 380-520 cents per bushel, with the high point depending on the planting weather speculation, usually occurring in June and July.

US industrial demand remains high and exports are increasing. The corn production in the United States is 385 million tons, and domestic consumption for food and industry has slightly increased in recent years, basically around 170-175 million tons in recent years, and around 175 million tons in 24 years, mainly reflected in the increase of fuel ethanol. The ethanol production in the United States is higher than last year and has recently remained around 1.1 million barrels per day. The demand for feed has been 148 million tons in 24 years, an increase of 450000 tons compared to last year.

In trading the US corn market, non-commercial holdings of US corn are also important indicators. In the first half of 2024, the non-commercial net clearance of US corn reached a historic high, and the price of US corn also reached a new low in recent years. Before the planting of new corn, the net surplus will still increase, and there is still room for a rebound in US corn.

3、 Brazil's corn production still has growth potential

The planting cost in Brazil is relatively low, and there is still high potential for growth in yield per unit area, as well as significant room for expansion in planting area. Brazil's 24 year production is 127 million tons, with a yield of 5.7 tons per hectare, far lower than the United States' 11.49 tons per hectare and Argentina's 7.97 tons per hectare. There is still room for growth in yield. Preliminary estimates suggest that there is still at least 30% room for growth in Brazil's production.

The domestic growth in Brazil is mainly reflected in the increase of fuel ethanol. Brazil has 22 valent fuel ethanol with a processing energy of 17 million tons of corn, and the consumption may reach 30 million tons in the next few years. Brazil is the world's second largest producer of ethanol and third largest producer of firewood, with an ethanol production of 33 billion liters, 25.5 billion liters of sugarcane ethanol, and 7.5 billion liters of corn ethanol in 2024. It is expected that the demand for corn will increase by about 2 million tons per year.

Part Four Fundamental Analysis of Domestic Corn

From the 24/25 supply-demand balance sheet, it can be seen that due to a significant reduction in the substitution of brown rice and wheat, imported corn has been suppressed, and the national corn production has decreased, resulting in a significant reduction in grain supply. However, demand remains relatively stable, and grain supply may be tight before the third quarter of 2025, leading to a possible market downturn. But it may also trigger more substitution and policies, such as the issue of high-yield substitution of wheat, the auction of brown rice, and the increase in imported corn. The core of the 25 year transaction is still the corn shortage in North China in the third quarter.

1、 Corn production has decreased, and it is expected that the cost of planting in the new season will continue to decline

The corn production in the 24/25 season is lower than last year, and the market expects a reduction of about 8 million tons. Steel ｕｎｉｏｎ data shows that the national area has decreased by 1.42% and production has decreased by 8.73 million tons. Among them, the Northeast region (four provinces in Northeast China) reduced production by 3.28 million tons, and the three provinces in North China (Shandong, Henan, Shandong) reduced production by 5.48 million tons. Due to the decrease in land rent this year, planting costs in Heilongjiang are also decreasing. The land rent in Heilongjiang is basically around 800 yuan/ton. Calculated at 1600 jin/mu, the cost is basically around 2000 yuan/ton, and the converted price at the port is basically around 2250 yuan/ton. However, the production in Xinjiang has increased this year, but the yield and bulk density are relatively high, and the corn mold and toxins are very low.

Due to the continuous decline in corn prices for three consecutive years since 2022, rental farmers have incurred losses in planting connections, and it is expected that land rent will continue to decrease in the 25/26 fiscal year. We can value and analyze through domestic land rent and profits from imported corn from abroad.

After the decrease in land rent, pricing will be set for Heilongjiang Port. If the domestic land rent drops to 700 yuan/mu, based on the cost of 430 agricultural materials (seeds, pesticides, fertilizers, etc.), the yield of 1600 kilograms of wet grain per mu will be calculated. The planting cost for farmers is approximately 0.7-0.71 yuan/jin. Excluding the cost of purchasing and drying grain points plus the cost of detachment (100 yuan/ton), the port cost is approximately 2050 yuan/ton.

Pricing is based on the cost of imported corn. It is highly likely that American corn will maintain a price range of 400-520 cents per bushel for a long time. When converted to domestic import costs, the price is between 2000-2400 yuan per ton, or approximately 2100-2300 yuan per ton. If an import profit of 100-200 yuan per ton is given, the probability of southern corn arriving at the port is approximately 2200-2400 yuan per ton, or approximately 2100-2300 yuan per ton when converted to northern port. The support for Beigang in 2050 will be very strong, and farmers are likely to make profits from planting.

2、 The substitution of brown rice and wheat in China has significantly decreased, and there will still be demand for substitution next year

Due to the abundance of wheat sprouts in 2023 and the transfer of brown rice auctioned in August 2023 to the first half of 2024, there was an overall grain surplus in the first half of 2024, especially in the North China market where there were more grain transfers. But in the second half of 2024, the auction of brown rice was stopped, and North China wheat began policy based storage, resulting in a high price difference between wheat and corn, which led to a significant reduction in the flow of wheat into feed enterprises. In 2021, Xiaomi and rice sold a total of 40.52 million tons (28.68 million tons for wheat and 15.57 million tons for rice); In 2022, the transaction volume of wheat and rice was 36.83 million tons (7.78 million tons of wheat and 29.05 million tons of rice); In 2033, approximately 25-30 million tons of wheat will flow into feed enterprises, and 14.79 million tons of rice will be traded and basically flow into feed enterprises.

The wheat in North China constitutes the top of the corn price increase, and the prices of wheat and corn are mutually influenced. Due to the oversupply of wheat in China, once the price difference between corn and wheat reaches around 150 yuan/ton, specifically around 180 yuan/ton (due to corn toxin), wheat will begin to be replaced. Due to the decline in protein prices and the high level of corn toxin in North China this year, feed companies are more willing to use Xiaomi as a substitute. The first stage is the rise in spot corn prices, narrowing the price difference between wheat and corn to around 150 yuan/ton for substitution. The feed corn portion will be replaced by wheat, with a static wheat price of 2400 yuan/ton, corresponding to a corn price of around 2250 yuan/ton. The second stage depends on the wheat harvest situation in June and the national market price. According to the tight supply of corn, corn in North China will be very tight after June, and the price difference between wheat and corn may be small. It is not ruled out that there may be an inverted situation between corn and wheat. You can refer to the situation of corn in North China after July 2023.

There have been several changes in the development trend of domestic wheat data and policy situation in recent years. The contribution balance sheet of wheat in the market is mostly revised based on the National Grain Center. The production data has remained stable in the past five years, but due to population structure issues and diversified demand substitution, the demand for flour continues to decline, and the use of wheat for feed will increase. Due to the end of wheat auctions in previous years, there is still significant pressure on wheat supply in 2024. Wheat reserves have been launched since 2024, with a market expectation of around 10 million tons. Currently, they are still being collected and stored, and the auction bottom price is 2500 yuan/ton, which is higher than the market price. There are still many uncertain factors for wheat in the year 25/26, such as the warm winter this year and the possibility of wheat being affected by freezing after the new year. The drought and waterlogging of wheat in May and June after the year still have significant uncertainty in the wheat market.

Due to low corn prices and large inventory in the past 24 years, brown rice has not been sold. But in 25 years, with the reduction of grains and the increase in prices, brown rice is likely to be auctioned off. The expected ranking quantity in the market is around 15 million tons, and the auction base price is 1400 yuan/ton, far lower than the base price of 1700 yuan/ton in August 2023. If calculated based on the bottom price of 1400 yuan/ton, the arrival price of brown rice products is basically 2230/ton, which is not much different from the corn price in May after the year. At present, the inventory of brown rice in 2019 is about 17 million tons, in 2020 it is about 1.03 million tons, and in 2021 it is about 14.7 million tons. Based on personal calculations, the usage of wheat and brown rice has significantly decreased by over 25 million tons.

3、 The import of grains has significantly decreased, and corn prices in both the north and south of China have gradually increased

In the first half of 2024, the import of corn and grains increased significantly. Starting from the fourth quarter, the country tightened grain imports, resulting in a significant decrease in grain imports and overall supply being lower than the previous year. According to the natural year, the total import volume of corn, barley, sorghum, and DDGS in China was 36.61 million tons in 2022, 43.79 million tons in 2023, and 33.56 million tons from January to October 2024. This is 2 million tons higher than the same period last year, which was 31.46 million tons. But the cumulative import of corn from January to October 2024 was 13.03 million tons, lower than the 18.6 million tons from the same period last year; From January to October 2024, a total of 7.56 million tons of sorghum were imported, which is 4.32 million tons higher than the amount imported from January to October last year; The cumulative import of barley from January to October was 12.75 million tons, higher than the same period last year's 8.45 million tons; DDGS1-10 imported a total of 230000 tons in October, higher than last year's 90000 tons. If according to the crop year, imported grains were 41.36 million tons in the 22/23 fiscal year, 32.23 million tons in the 23/24 fiscal year, and 47.97 million tons in the 24/25 fiscal year.

Although there is a large amount of imported corn, some of it has entered reserves, and the market expects about 20 million tons of imported corn in reserves. Most of them will be imported within 20-24 years. Considering that some imported corn may exceed the deadline, it is expected that about 7-8 million tons of imported corn will be disposed of next year. Due to the one-time reserve policy in China, the scale is expected to reach 20 million tons in 3 years, and 10 million tons are expected to be collected and stored in 2023/24. According to research, it is expected to purchase approximately 8 million tons. There are still acquisition plans for the 24/25 fiscal year, but China Grain Reserves Corporation is relatively cautious in its acquisitions this year and has higher requirements. It is expected that the acquisition volume may be lower than the previous year.

Regarding the substitution of imported corn and imported grains, it is expected that there will be a significant decrease in the 24/25 fiscal year compared to the previous year. Imports will decrease in the year 24/25 compared to the previous year. Southern corn needs to be imported from Beigang, and it is generally offered at a discounted price. However, due to the possibility of auctions for imported corn in storage, offsetting the decrease in grain imports, the overall import of corn and grains remained basically unchanged from last year.

4、 Slow growth in domestic feed demand

In 2024, domestic feed demand is lower than last year, and terminal demand is weaker than expected. Feed demand is mainly divided into pig feed, poultry feed, egg and poultry feed, ruminant feed, aquatic feed, etc. The feed consumption in 2024 will decrease compared to 2023, with a slight increase in meat and poultry feed, and the largest proportion of pig feed. The main reason for the decrease in feed demand in 2024 is the decrease in pig feed demand. According to data from the Feed Industry Association, feed production decreased by 4.3% in the first three quarters, and pig feed decreased by 6.8% year-on-year. It is expected that the annual feed production will decrease by about 4%. The difference between the data from the Industry Association and the Bureau of Statistics is not significant, but the egg and poultry feed from the Industry Association has decreased by about 6%, which is significantly different from the 2-3% growth of our egg and poultry feed. This may be due to the fact that many individual egg and poultry breeders use self ingredients.

The inventory of live pigs is slowly increasing, and the demand for pig feed is slightly increasing. According to data from Steel ｕｎｉｏｎ, the inventory of 123 sows capable of breeding in November was 5.0257 million, an increase of 1.56% year-on-year. The inventory of commercial pigs in 123 large-scale breeding farms was 35.1487 million, a year-on-year increase of 0.29%. Due to the decline in corn and soybean meal prices, it is expected that the inventory of live pigs will continue to slowly increase by 2025, with a slight increase in slaughter weight and a slight increase in demand for pig feed. Due to the increasing slaughter capacity and decreasing breeding costs of white feathered broiler chickens, it is expected that the demand for meat and poultry feed will be around 2%. Egg and poultry farming has good profits, and the inventory of laying hens is still high, reaching a peak in the first quarter of 2025. It is expected that the demand for egg and poultry will also increase slightly by about 2%. The overall demand for feed will increase by approximately 2-4%, and the substitution of brown rice and wheat will significantly decrease. The amount of corn used in feed will also increase significantly. I personally estimate that the amount of corn used will increase to 195 million tons, an increase of 15 million tons from the previous year.

5、 Low price corn offers deep processing profits

The overall demand for deep processing is still increasing in 2024. It is expected that the amount of deep processed corn used in the 24/25 fiscal year will be 80 million tons, an increase of about 2 million tons compared to the same period last year. Among them, deep processing excluding ethanol will be approximately 59.5 million tons, an increase of about 2 million tons compared to last year. The overall profit of deep processing in 2024 is good, partly due to the drop in corn prices to a new low. Although the yield of corn in the 24/25 season has decreased, the quality of corn this year is poor, with high levels of mold and toxins, and there will be sufficient raw materials for deep processing. The Northeast market, especially the western part of Heilongjiang and the northern and western parts of Jilin, has experienced higher levels of mold and toxins this year due to the rainy season in June and the rainy harvest season compared to previous years. Especially toxins, corn below 1500 accounts for a relatively small proportion. Traders have suffered significant losses in the past few years, and this year they have been relatively cautious in their acquisitions. Large purchasing entities have been relatively slow in their purchases, and the high temperatures this year have limited the storage conditions for corn by farmers, leading to an increase in mold and toxins. For the North China market, production has decreased this year, and there has been a significant reduction in substitution in North China. After June, corn in North China will become tighter, and the price difference between North China corn and Northeast China corn will widen.

The price difference between corn and starch is expected to remain relatively high in 2025. Due to the continuous decline in corn prices in 2024 and the low prices of by-products in the past five years, the price difference between starch and corn is at a relatively high level. In 2024, the spot price difference between starch and corn in Heilongjiang Province will be around 600-800 yuan/ton, while the spot price difference between starch and corn in Weifang, Shandong Province will be around 600-900 yuan/ton, higher than the average price of 400-600 yuan in the past. In the first half of 2025, the price of by-products will still be at a low level. According to the contribution of Shandong's by-products, which is basically between 520-560 yuan, low-priced corn will provide profits for starch enterprises. It is expected that the price difference between corn and starch will still be relatively high in the first half of 2025, with Shandong basically at 550-700 yuan/ton.

There are two significant changes in downstream demand for starch. One is that starch can increase exports. According to previous export data, corn starch exports can increase by 400000 to 600000 tons per year. Secondly, the import volume of cassava starch has increased, and the price difference between cassava starch and corn starch has begun to narrow.

The alcohol industry will remain near the breakeven line for a long time in 2024. The general alcohol industry is greatly affected by corn, and the operating rate and profit show strong seasonal patterns. Moreover, most alcohol companies are located in the Northeast region and are greatly affected by corn. The alcohol industry is expected to maintain a stable corn consumption of 20.5 million tons by 2025.

6、 Channel inventory is low, while port inventory in the north and south remains high

In 2024, due to significant losses incurred by traders, after the new season's listing, traders were relatively cautious. In addition, China Grain Reserves Corporation had high purchasing requirements and slow purchasing volumes. Traders maintained low inventory and mainly focused on contract grain. However, the inventory in Beigang has reached a new high in the past five years, and the inventory in the south has also remained high. As of December 6th, the corn inventory in the four northern ports was 4.565 million tons, an increase of 3.8 million tons compared to last year. The corn inventory in southern ports is 2.43 million tons, also at a historical high.

The biggest problem this year is that traders do not stock up before the Spring Festival, and will actively stock up after the New Year. The pressure on corn is concentrated before the New Year. After the year, traders and downstream enterprises will actively stockpile goods, and the inventory of corn in intermediate channels will be significantly lower than the level of previous years. It is expected that the inventory in channels will be around 20 million tons lower than last year.

7、 Corn and starch trading logic

In the first half of 2024, the price difference between corn in Heilongjiang and North China is at a low level in recent years, and the pricing power of starch is in Shandong. However, in the first half of 2025, due to reduced production of corn in North China and significantly lower inventory and substitutes in the North China channel compared to last year, it is expected that the price difference between North China corn and Northeast corn will widen from April next year, and transportation and logistics costs will be provided. The pricing of starch is mainly in Heilongjiang and Shandong, and it is expected that the bottom price of starch in the next 25 years will be in Heilongjiang. Years ago, it was estimated that the basic bottom would be around 1850 yuan in Heilongjiang and around 2000 yuan in Shandong. According to the calculation of 2180 yuan on the market and 570 yuan of by-products in Heilongjiang, the profit and loss of starch in Heilongjiang is basically 2620 yuan/ton. Calculated at 550 yuan for by-products in Shandong, the profit and loss line for Shandong is basically 2800 yuan. When converted to the plate, the minimum cost is 2630 yuan, and the profit and loss line of 05 Rice noodles difference is 450 yuan.

Starch may experience an independent market trend in the third quarter of next year. In the third quarter of next year, the corn market in North China will be relatively tight, and the price difference between North China corn and Northeast corn will widen. The starch price in Shandong is relatively high and provides profits. The starch market in 2025 may be similar to that in 2023.

Part 5 Market Outlook

Corn:

Global supply remains sufficient in 24/25, with a decrease in US corn yields and an increase in demand for US corn. The bottom support for US corn is strong. The expected planting area for the year 25/26 is expected to increase, and US corn will maintain a bottom oscillation for a long time. The corn US corn 12 contract is likely to be between 400-520 cents per bushel. Brazil has less pressure on the first crop, but there is still potential for growth in Brazil's area and yield, and it will also compete for the share of US corn exports. In the new season, domestic corn production has decreased, imported grains have started to decrease, and the substitution of wheat and brown rice has significantly decreased. Demand is slowly increasing, and corn supply will be tight in the 24/25 fiscal year. Domestic corn will fluctuate weakly before the New Year, and traders and downstream traders will stock up after the year. There is room for a rebound in spot prices, but wheat prices will suppress the rebound height of corn in North China. In the third quarter, corn in North China will be relatively tight, and corn may experience a tail up trend. Before the year, corn spot prices would reach a low point, with a basic bottom of 2000 yuan/ton in Shandong, 1850 yuan/ton in Heilongjiang, and a basic bottom of 2000 yuan/ton at the port closing price. The high point after the year may occur in the third quarter, and the high point of the closing price in Beigang may be around 2400 yuan/ton. The cost of corn cultivation has decreased in the 25/26 fiscal year, but the expected downward space for new season corn prices is limited. The closing price of 2000 yuan/ton for new season corn in Beigang is strongly supported. 03 corn is subject to mandatory cancellation, with a high market premium, and there is a high probability that 03 corn will experience a temporary return.

Starch:

The corn supply for the year 24/25 is sufficient, with a high operating rate, and starch inventory will still remain high. Due to the long-term low level of by-products and the low price of corn, starch companies have maintained high profits for a long time, and domestic starch can be exported after October, resulting in a high price difference between corn and starch. In the first half of 2025, starch enterprises will still be near the profit and loss line, and the price difference between Shandong starch and corn will still be above 550 yuan. In the third quarter, due to the tight supply of corn in North China, the price difference between North China corn and Northeast China corn will widen, and given the profits of Shandong enterprises, the price of starch in Shandong may reach a high point for the year. It is expected that the 25 year low point of Shandong starch will be between 2650-2700 yuan/ton, and the low point of Heilongjiang starch will be at 2450 yuan.

[Trading Strategy]:

The bottom of US corn has basically been established, with strong support at 420 cents per bushel for 03 US corn. It is expected that there is room for a rebound in US corn. Domestic corn shows weak spot and strong futures, with expectations of spot price increases in the distant months. 05 Corn has limited downward space and a volatile mindset.

1. Unilateral: Enter the US corn 03 contract below 430 cents per bushel, with a target of 450 cents per bushel. Domestic 05 corn is expected to fluctuate between 2150-2300, with attempts to shorten below 2170.

2. Arbitrage: The price difference between corn and starch in 05 is fluctuating strongly at 340-420. Buy corn spot with a short market of 03 corn or 05 corn. North China can also buy spot goods and sell 07 corn.

3. Option: Sell c2305-c-2260. (The above views are for reference only and shall not be used as a basis for market entry).

Brand new Miaoxiang Investment Research Assistant, experience it now