Where is the domestic corn market heading?

China's corn policy is supporting the market and accelerating the transfer of surplus grain from farmers to the middle and lower reaches. It is expected that the domestic corn market prices will rise at the bottom and fluctuate strongly in the short term. At the same time, the price increase of some deep processed products is difficult to quickly follow up, and the production efficiency and profitability of deep processing enterprises will narrow or suffer losses. The high operating rate of the deep processing industry will fluctuate weakly in the later part of this quarter. In the later stage, it is necessary to dynamically monitor changes in China's corn storage, auction, and import policies, the progress of the US China trade tariff war and subsequent negotiations, the impact of weather in South American production areas, and US biofuel policies on global corn and soybean prices.
The focus of corn prices in major domestic production areas has shifted upwards, and some grassroots farmers and traders have become more willing to sell their grain. As a result, the quantity of corn has begun to increase, leading to high production costs and insufficient motivation for processing enterprises to continue raising prices, resulting in a significant slowdown in price increases. With the rise of temperature, it is difficult to store high moisture grains, and farmers who store moist grains have increased their enthusiasm for selling. A small number of drying towers purchase and wait for prices to rise, while traders purchase based on sales. Processing enterprises have relatively sufficient inventory, and market purchasing and sales activity is average. Some enterprises with low arrival volumes have raised their corn purchase prices. The grassroots grain sources in the Huanghuai production area of North China are relatively scarce, and the enthusiasm of farmers to raise prices is heating up. The phenomenon of reluctance to sell has intensified, resulting in a tight circulation of grain sources, and the purchase prices of enterprises continue to rise. Part of the reserve warehouses have completed the rotation task, and there is strong demand for traders to purchase. Due to limited surplus grain, the actual purchase volume is limited, and the local grain source mainly supplies grain enterprises. In recent days, there has been a small amount of grain arrivals from Northeast China's grain sources, and local traders' willingness to ship has increased. The amount of goods arriving in front of deep processing doors has gradually increased, and the rise in corn prices has slowed down significantly. Some enterprises have also lowered their prices narrowly.
The first quarter of this year will be a trough period for China's grain imports, which is conducive to maintaining a strong trend in domestic corn prices. Meanwhile, based on the current shipping schedule of 2130-2160 yuan/ton for imported barley and 2330 yuan/ton for imported sorghum from southern ports in April and May, and the current pre-sale price of 2320 yuan/ton for corn in May, there is no significant price advantage. In other words, apart from procurement at the national level, we currently do not see the impact of the large influx of imported grains on the Chinese market.
In February, the inventory of aged corn in China will continue to decline, and the new season corn will continue to be in the peak season for listing. As the Spring Festival ends and farmers in the main corn producing areas in the north begin to prepare for spring plowing funds, their enthusiasm for selling corn will gradually increase. Coupled with the gradual rise in temperature and high moisture corn mold rate, farmers will be forced to ship as soon as possible. Therefore, theoretically speaking, the trading volume of corn on the market in February will still be significantly sufficient. However, due to the impact of the off-season, the demand for new purchases in aquaculture and feed production is limited, resulting in some negative pressure on corn prices on both supply and demand sides.
In short, China's corn policy has accelerated the transfer of surplus grain from farmers to the middle and lower reaches, and it is expected that the domestic corn market price will rise at the bottom in the short term. At the same time, the price increase of some deep processed products is difficult to quickly follow up, and the production efficiency and profitability of deep processing enterprises will narrow or suffer losses. In the later stage, it is necessary to dynamically monitor changes in China's corn storage, auction, and import policies, as well as the impact of weather in South American production areas and US biofuel policies on global corn and soybean prices.