Tang Xiaoxiao, corn market analyst of Zhuochuang Information
[introduction] in May, corn prices in North China stopped falling and rebounded, intermediate trade links and downstream feed enterprises were active in building databases, and supported by the cost of grain storage in the early stage, traders held grain equivalent and intended to operate in the long term, at the end of May and the beginning of June.Pennclash3Before the advent of the wheat harvest, the number of corn stocks may be lower than expected, there is still support for corn prices, short-term or there may still be an upward trend, long-term or lack of upward power, there may be a decline.
At the beginning of May Day holiday, corn prices in North China began to rise, traders and farmers hesitated to sell, while downstream feed enterprises began to build warehouses driven by rising prices, increased purchasing intention, and continued to support the rise in corn prices in the producing areas.
The arrival volume of enterprises is low, and corn prices in North China have stopped falling and rebounded.
Due to the continuous decline in corn prices in late April, the price of gross grain in some areas fell to less than 1 yuan per jin, and grass-roots units hesitated to sell. Entering May, coinciding with the May Day holiday, traders' corn purchases and shipments are at a low level, and corn arrivals from downstream deep processing enterprises have decreased, resulting in higher prices for acquisitions. According to Zhuochuang information statistics, as of May 15, the average daily corn delivery volume of enterprises in Shandong area was 392 vehicles, an average decrease of 529 vehicles, or 57%, compared with the second half of April. With the rise of corn prices and the fact that the cost of grain storage in the early stage of traders is still higher than the current price, traders have a strong price-raising mentality, and under the price increase of downstream enterprises, the mainstream price of the market continues to rise. Under the support of bullish mentality, corn prices in Northeast China rose synchronously, but the overall increase was small.
Traders in production areas and downstream feed enterprises are actively building warehouses to support the rise in prices.
With the rise in corn prices in the producing areas and the increase in the replenishment intention of downstream feed enterprises, small and medium-sized feed enterprises in the south are actively purchasing grain from North China, and the corn inventory of some enterprises has increased from 20 days to more than 30 days. Enterprise replenishment continues to increase the corn delivery volume in North China, and under the mainstream psychological effect of the market buying up but not buying down, corn prices continue to rise. In addition, the rise in prices in the producing areas helped traders in the producing areas build warehouses in the last wave, and some traders in North China continued to increase their efforts to buy corn, with more purchases and less shipments, which also supported the rise in local corn prices in North China.
At the end of May, the storage volume of corn before wheat harvest may be lower than expected, and the price of corn will be higher than expected.
After the Spring Festival in 2024, traders in North China experienced two times of centralized database construction. First of all, from late February to mid-early March, traders concentrated purchases, inventory gradually increased, and the cost of building the database was higher than the current mainstream market price in May.Pennclash3.08-1.12 yuan per jin. Secondly, during the period from late April to mid-early May, as corn prices continued to fall in April, and grass-roots surplus grain gradually bottomed out, some traders actively acquired and began to increase inventories. During this period, the purchase price of gross grain was concentrated at 1.02-1.07 yuan / jin. At present, some traders still have high-cost grain sources that have not yet come out of the warehouse, continue to hold grain prices, and the situation of corn storage from late May to early June may be lower than expected. Since June, local traders in North China have mainly purchased wheat, and corn purchases and sales have decreased, and corn supply may decline, resulting in a decrease in corn delivery by local deep processing enterprises, which will support the rise in corn prices in North China.
The corn supply in the third quarter was higher than that of last year, and the increase may be lower than expected.
In the third quarter, Zhuochuang Information expects the total surplus corn to increase over the same period last year. It is initially estimated that the total corn supply at the beginning of the third quarter is 99.62 million tons, an increase of 26.55 million tons over the same period last year. On the one hand, the trade inventory in North China and Northeast China is expected to be higher than that in the same period last year; on the other hand, some enterprises have concentrated corn imports in Hong Kong after July, and spring corn in the south was listed in August, adding a supplementary supply market. On the demand side, as the operating rate of the deep processing industry is higher than that of the same period last year, and the replacement of wheat this year may decline, the consumption of forage corn may be higher than that of the same period last year, and the total corn consumption in the third quarter is expected to reach 61 million tons, an increase of more than 6 million tons over the same period last year. However, demand growth is less than supply growth, so corn prices are expected to rise less than expected in the third quarter, and there is no lack of expectations of a slight decline.
To sum up, in the short term, corn prices still have room to rise before the end of June, and the active wheat harvest may affect corn supply, supporting corn prices to rise slightly. From a long-term point of view, entering the third quarter, under the supplement of wheat substitutes and imported corn, the pattern of supply and demand is relatively loose, corn prices are insufficient to rise, or may fall.