Corn and starch: the market may have entered the stage of actively replenishing inventory

Corn spot prices continued to be strong over the weekend, with a decrease in door-to-door to vehicle volume for deep processing in the North China production area leading to a rebound in corn purchase prices, while the Northeast production area remained stable with some gains. For corn, considering that the progress of grain sales has already exceeded half, the market may have gradually shifted from passive destocking to active restocking, and the medium to long term upward trend may have been established. Next, we need to pay attention to two aspects. One is the potential increase in supply in the future. There is not much pressure before the Spring Festival, as market purchases and sales tend to be flat, which may be more reflected in the sale of surplus grain by farmers after the festival; The second reason is that the current futures price has seen a significant increase compared to spot prices, and there is a need for continuous positive feedback from spot prices. We need to continue to pay attention to the gathering volume of northern ports and the arrival volume of deep processing vehicles. In summary, we hold a cautious bullish view and recommend investors to hold long positions in the early stages.

For starch, the recent low volatility of the starch corn price difference is mainly due to the sustained high inventory levels in the industry's supply and demand side. Considering the continued low level of by-products and the relatively higher starch basis difference compared to corn, coupled with the expansion of production losses on the market, these factors limit the space for the starch corn price difference to continue narrowing. However, the corn raw material side may have already established an upward trend, and the starch corn price difference is expected to turn towards expansion. In this situation, we hold a cautious bullish view and recommend investors to hold early long positions or starch corn price arbitrage.