The new crown epidemic has pressed the pause button on the domestic corn market, and the first thing to face after the unsealing is a wave of destocking, which is expected to have a certain impact on spot prices. In the long run, new season corn prices will remain strong amid high international cereal prices and rising domestic planting costs.
The outbreak of the epidemic in mid-March pressed the pause button on the corn market, the logistics across the country were blocked, the circulation of raw materials and products was restricted, and the overall price of corn was stable. Entering the middle and late April, the epidemic prevention and control has achieved remarkable results, there are epidemic areas in various places that are lifting the sealing control, the port has recently entered the right track, and the purchase and sale have gradually recovered, so how will the corn market be interpreted?
After the epidemic prevention and control was unsealed, the port faced destocking
At present, the corn inventory of the northern port is still about 5 million tons, the port storage capacity has been tight before the epidemic, and the inventory has not been circulated after the port is closed, plus the natural dry grain is about to enter the market, and the early tide grain will inevitably have to go to a wave of inventory after the epidemic is unsealed. Among the downstream procurement enterprises, the cash flow of feed enterprises is tight, coupled with the fact that pig breeding is still in a serious state of loss, there is no willingness to build a large amount of inventory, mainly to use as needed; deep processing enterprises are expected to have a long-term procurement plan, but considering that the starch inventory is at a high level at this stage, the operating rate will not recover in a short period of time, and the construction of raw materials may not be as strong as expected.
Feed grain suspension auction Market sentiment was ignited
Last week, the news that feed rice and wheat were stopped at the same time came out, the market reaction was relatively strong, corn and wheat prices have rebounded sharply, and wheat with a previous decline of 200 to 300 yuan / ton of wheat has risen again, and it is now close to 3400 yuan / ton, and has created new highs.
But this wave of rebound is only temporary, on the one hand, the feed rice auction is suspended because the overdue rice health inspection indicators in 2017 have not yet come down, and the quality inspection centers in this half month are stepping up the testing, after the indicator testing, the auction will continue; on the other hand, the aged rice has been in 2017, stored for 5 years, and the local government reserve storage period is generally no more than 5 years for wheat, rice and corn for no more than 3 years, and edible oil for no more than 2 years.
Therefore, the overdue rice will not continue to be in the grain inventory, and destocking is the general trend. For the wheat auction, to a greater extent, it is also an emotional impact, and the wheat auctioned in the early stage has gone to the flour mill and has not entered the feed factory, and the feed factory has long since stopped taking wheat substitution into account.
Supply and demand are similar to last year's historical market or recurrence
The supply and demand of the corn market in the second quarter of this year have many similarities compared with last year, and the supply side is facing the last wave of surplus grain shipments.
On the demand side, the second quarter of last year fully reflected the high price to suppress demand, feed mills with wheat instead of corn, and gradually achieved corn "zero additive"; the demand in the second quarter of this year will be greatly reduced, the raw material cost corn, soybean meal prices are super high, breeding continues to lose money, pigs, broiler stocks are greatly reduced, layer chickens are stable, aquatic products and ruminants are basically stable, consumption is expected to decrease by 24 million tons, this weak demand is completely equivalent to the nature and degree of impact of last year's corn substitution.
In terms of prices, corn began to fall back in the second quarter of last year, and since the beginning of May, corn has fallen all the way to 2429 yuan / ton in September after being named by the National Standing Committee for three consecutive times. Therefore, the corn price trend in the second quarter of this year or will copy last year's market, the probability will fall from the high, first of all, the bubble of the Russian-Ukrainian conflict minus 100 yuan / ton, the port to see 2650 yuan / ton position.
The international situation is still unstable In the third quarter, corn is optimistic
At present, the international situation is volatile, cereal inflation has not eased, and the cost of imported grain is at a high level. Among them, the price of imported corn is 3180 yuan / ton, the price of imported American sorghum is 2830 ~ 2840 yuan / ton, the price of imported Indian crushed rice is 2900 ~ 2930 yuan / ton, and the price of imported barley is 2850 yuan / ton. With alternative cereal prices high, corn prices will rise in the long run.
In addition, affected by the rise in international fertilizer prices and the record high domestic ground rent prices, the cost of corn planting in the new season has increased significantly, accounting for the arrival cost of 2800 yuan / ton, an increase of 200 to 300 yuan / ton over last year, laying the bottom of the price of corn in the new season.
Comprehensive analysis, after the unsealing of the epidemic, the corn market is first faced with a wave of destocking, which is expected to have a certain impact on spot prices. In the long run, in the context of high international cereal costs and rising planting costs, the price of corn in the new season will remain strong. (Originally published on the third page of the Grain and Oil Market Newspaper on April 21, 2022)
Source丨grain and oil market report
Total Duty 丨 Liu Xinhuan Coordinator 丨 Liu Chao Editor 丨 Congshen
