See an increase at the beginning of the year! Two major factors boost confidence in the corn market

At the beginning of the new year, the price of corn in the production area has finally risen, and farmers have hope. After the beginning of spring this year, they need to prepare well for farming. Now market participants such as small grain vendors, drying towers, and traders have confidence in harvesting grain, "Chai Yinfeng, General Manager of Heilongjiang Wudalianchi Yingfeng Grain Trading Co., Ltd., told Futures Daily.

Large grain enterprises build a 'policy bottom' for corn prices through their collection and storage

In early December 2024, the Dalian corn futures 2501 contract hit a new low in nearly 53 months since July 6, 2020. At the same time, domestic corn spot prices continued to fluctuate downward, and the market was once filled with pessimistic expectations. In some regions, corn deep processing enterprises have repeatedly lowered the factory price of corn. The decline in corn prices has led to a decrease in farmers' income and enthusiasm for growing crops.

With large and medium-sized enterprises such as China Grain Reserves Corporation listing for purchase and stopping the sale of imported corn in the main corn producing areas of Northeast China, especially the decrease in the quantity of imported corn and substitutes, the domestic corn market has reignited enthusiasm. "Chai Yinfeng told reporters that the" policy bottom "of corn prices has emerged, and with more measures and policies to support agricultural product prices, important agricultural product prices such as corn, peanuts, and wheat will have good performance.

In 2024, my family planted more than 30 acres of peanuts, nearly 15 acres of corn, and over 100 acres of wheat on the farmland and floodplain near the Yellow River. Currently, wheat has been sold, while corn and peanuts have not yet been sold. Peanuts and some corn are still waiting for the best selling price to come. "Wu Xuezhong, a farmer from Yuanyang County, Henan Province, told reporters that during the growth period of peanuts and corn, the cost of applying medicine once per acre of land is not low, and fertilizer prices have also increased significantly. However, after peanut and corn harvest, the yield is either low or the price drops. In recent years, it has been difficult to make money from growing grain, and he hopes that corn prices will rise more.

The significant reduction in the quantity of imported corn and its substitutes has boosted market confidence

According to the reporter's understanding, the import volume of corn in China has continued to decline since the second half of 2024.

From the perspective of cumulative import volume, from January to November 2024, China's corn import volume was 13.32 million tons, a year-on-year decrease of 39.9% and a significant decrease of 51% compared to the same period in 2021.

From the perspective of monthly corn imports, since the second half of 2024, the monthly corn imports have continuously hit a new low. For example, since August 2024, the import volume has been less than 500000 tons for four consecutive months, falling to a low in nearly five years.

From January to November 2024, the total import volume of feed substitutes such as corn, sorghum, and barley decreased by about 5% year-on-year.

According to the General Administration of Customs, the average taxable cost of imported sorghum in China since 2024 is about 2370 yuan/ton, significantly higher than the prices of imported corn and barley, and even temporarily higher than the prices of domestically produced corn in southern ports. Grain consuming enterprises generally reflect that imported sorghum has little value as a substitute for animal feed and is mainly used for brewing.

A market insider told reporters that considering factors such as the quantity and cost-effectiveness of imported corn, barley, and sorghum, since the second half of 2024, many large feed breeding enterprises in southern China have continuously reduced the proportion of imported grains added to energy feed. At present, most enterprises no longer use imported grains in feed formulations, and mainly rely on domestically produced corn.

Based on the expected annual corn import volume of the new crop, domestic and foreign institutions unanimously predict that China's corn import volume will continue to decline significantly. The International Grains Council (IGC) expects China's corn imports to be 15 million tons in 2024/2025, a decrease of 2 million tons from previous forecasts and a year-on-year decrease of 38%.

Considering factors such as domestic policies, production and demand, and import profits, the market expects a significant decrease in the demand for corn feed substitutes for breeding and feed processing enterprises in China by 2025.

It is reported that since November 2024, China has hardly made bulk purchases of US corn. From November 12th to December 12th, 2024, China purchased less than 1000 tons of corn from the United States, and did not purchase corn from the United States for three weeks.

Analysts say that currently it is the peak period of domestic corn sales, and the number of imported substitutes has decreased, especially the significant decrease in corn imports, which is conducive to reducing the supply pressure on the domestic corn market and increasing the sales of domestic corn. The further decrease in the import volume of feed substitutes in the later stage will also boost confidence in the domestic corn market. Most feed breeding enterprises in the southern corn sales area have actively adjusted their formulas and purchased long-term domestic corn. In addition, a series of measures to stabilize corn prices in China have been introduced, which will effectively increase the consumption demand of grain consuming enterprises for domestic corn, boost confidence in the corn market, and promote the stabilization and recovery of domestic corn prices.