Corn: Grain sales sentiment declined, corn bottomed out and rebounded

Summary of Views

Core view: more neutral Brokers expect Ukraine's seaborne exports of agricultural products to fall to around 3.8 million tonnes in January, compared to 6.1 million tonnes in December. Last week, the temperature anomaly in the main corn producing areas of Brazil was high and precipitation was low. This week, drought conditions are expected to persist in the main maize producing areas of Brazil, which is not conducive to the growth and development of a single crop of maize. Brazil's corn planting rate in 23/24 was 92.4 percent, lagging behind the previous year. In terms of exports, as of February 2, 823,500 tons of Brazilian corn are expected to arrive in mainland China in February.

Last week, prices in the domestic spot market fluctuated upward. In terms of production areas: the pace of grain sales at the grassroots level in Northeast China has declined, traders have built warehouses in small quantities, market supply and demand have stabilized, and prices have stabilized. Prices in North China rose first and then stabilized, corn prices fell to a new low, manufacturers purchase prices fell below 2,400 yuan/ton, grassroots grain sales intentions declined, coupled with snowfall on the weekend, prices stabilized operation;

Last week, the price of live pigs rose slightly, and the profit of self-breeding and the fattening profit of purchased piglets rebounded significantly. Approaching the Spring Festival, the situation of white strips is improving, the operating rate in the north is generally increasing, with the increase in demand for stocking during the Spring Festival, driving the price of frozen products to rise slightly; It is expected that this week's supply stock will be digested and the demand will gradually end, and the pig price may stabilize and consolidate. In terms of deep processing, corn starch processing profits fell slightly but still profitable, the operating rate of corn starch enterprises near the Spring Festival was temporarily stable, corn consumption fell slightly, and the prices of corn starch and by-products stabilized. The follow-up will focus on the changes in profits and by-product demand of deep processing enterprises after the Spring Festival.

On the whole: at this stage, corn prices have stopped falling and stabilized, farmers have gradually ended selling grain before the Spring Festival, and the purchase and sales have gradually stagnated after the Lunar New Year, and the supply pressure has been suspended. On the supply side, the supply of corn gradually ended before the year, and the arrival of corn in deep processing enterprises decreased significantly. On the demand side, the profit of breeding demand has improved, but the feed side is still mainly to maintain the necessary demand, and the clear signs of improvement in demand have not yet been formed; Some traders began to build warehouses. To sum up, it is expected that the corn 2405 contract price will fluctuate between 2350 yuan/ton and 2450 yuan/ton this week.

Origin: Neutral Brokers expect Ukraine's seaborne exports of agricultural products to fall to around 3.8 million tonnes in January, compared to 6.1 million tonnes in December. Last week, the temperature anomaly in the main corn producing areas of Brazil was high and precipitation was low. This week, drought conditions are expected to persist in the main maize producing areas of Brazil, which is not conducive to the growth and development of a single crop of maize. Brazil's corn planting rate in 23/24 was 92.4 percent, lagging behind the previous year. In terms of exports, as of February 2, 823,500 tons of Brazilian corn are expected to arrive in mainland China in February.

Domestic supply: more than the production area: the pace of grain sales at the grassroots level in Northeast China has declined, traders have built a small number of warehouses, market supply and demand have stabilized, and prices have stabilized. Prices in North China rose first and then stabilized, corn prices fell to a new low, manufacturers purchase prices fell below 2,400 yuan/ton, grassroots grain sales intentions declined, coupled with snowfall on the weekend, prices stabilized operation;

Feed demand: short Last week, the price of live pigs rose slightly, and the profit of self-breeding and the fattening profit of purchased piglets rebounded significantly, but the demand for feed was still sluggish. Approaching the Spring Festival, the situation of white strips is improving, the operating rate in the north is generally increasing, with the increase in demand for stocking during the Spring Festival, driving the price of frozen products to rise slightly; It is expected that this week's supply stock will be digested and the demand will gradually end, and the pig price may stabilize and consolidate.

Deep processing demand: more deep processing, corn starch processing profits fell slightly but still profitable, near the Spring Festival corn starch enterprises operating rate is temporarily stable, corn consumption fell slightly, corn starch and by-product prices stabilized. The follow-up will focus on the changes in profits and by-product demand of deep processing enterprises after the Spring Festival.

In terms of substitutes, the center of gravity of wheat prices has risen slightly this week, and the price difference of jade wheat is still large, which still supports corn prices.

Weather conditions: neutral It is expected that in the next 10 days, there will be a wide range of rain and snow in the central and eastern regions, and the cumulative precipitation in Huanghuai, southern Jianghuai, southern Jianghan, Jiangnan, and South China will be significantly more than that in the same period of the year, and there will be less snowfall in Northeast and North China.

Foreign origins

United States: U.S. corn exports

• In the week of February 2, the net export sales of corn in the United States in 2023/2024 were 1.2067 million tons, compared with 955,000 tons in the previous week, an increase of 26.35% month-on-month, and the total export volume of US corn was 16.2707 million tons, and the undelivered sales volume was 17.4181 million tons. The overall sales progress was 62.39%, 19.31 percentage points higher than the same period last year, and the overall sales progress was slightly faster than the same period last year.

Data source: Zijin Tianfeng Futures Research Institute

United States: U.S. corn exports to the mainland

• In the week of February 2, the United States loaded 911,300 tons of corn exports in 2022/2023, compared with 931,700 tons in the previous week, and the United States loaded 71,000 tons of corn to China (mainland), compared with 68,000 tons in the previous week, an increase of 3,000 tons month-on-month, with a cumulative sales volume of 1.837 million tons to China, which is generally at a record low export level.

Data source: Zijin Tianfeng Futures Research Institute

United States: U.S. corn funds decreased their net long positions

• As of the week of February 2, the long position of U.S. corn was 158,200 lots, an increase of 3,000 contracts from last week, and the short position was 423,500 lots, an increase of 7,700 contracts from last week.
• As of the week of February 2, the net long position was -275,400 lots, a decrease of 3,800 contracts from last week, and the willingness to short increased. The price of the main CBOT corn contract for the week was a low of 436.5 cents/bushel and a high of 448.75 cents/bushel.

Data source: Zijin Tianfeng Futures Research Institute

Brazil: Drought conditions are expected to persist this week in Brazil's main corn-producing regions

• In the week of February 2, the temperature anomaly in the main corn producing areas of Brazil is slightly high, the precipitation anomaly is low, and most of the main producing areas are still relatively dry; NOAA predicts that the precipitation in the main corn producing states in Brazil will be low in the next 6-10 days, the temperature will be high, and the drought situation may continue, which is not conducive to the growth and development of the first crop of corn and the sowing of the second crop of corn.

Source: NOAA, Zijin Tianfeng Futures Research Institute

Brazil: The first crop of corn is sown and the second crop of corn is sown

• Brazil's first corn crop for the 2023-2024 crop was 92.4% in the week ended Feb. 2, compared to 90.4% last week and 97.8% in the same period last year, lagging behind the same period last year, while the average harvest progress was 10.4%, slightly faster than the same period last year, and the second corn planting rate was 10.3%, compared to 5.0% last week and 3.9% in the same period last year, slightly faster than the same period last year.
• According to the national average weighted by the total sown area of GO, PI, TO, SP, MG, MA, MS, MT and PR states, the vegetative development stage of maize in Brazil accounted for 30.4%, the germination part accounted for 2.6%, the flowering part accounted for 11.3%, the grain filling stage accounted for 21.2%, the mature part accounted for 24.2%, and the harvest part accounted for 10.4%. The vegetative development stage and germination stage accounted for 46% and 53.7% of the second crop maize.

Data source: CONAB, Zijin Tianfeng Futures Research Institute

Brazil: Weekly corn exports fell month-on-month

• According to the latest estimate of Brazilian Anec, Brazil's corn exports were 504,600 tons from January 28 to February 3, compared with 554,900 tons last week, down 9.06% month-on-month.
• As of February 2, according to the latest estimate of Brazilian Anec, Brazil's corn exports are expected to reach 3.4964 million tons in January, compared with 4.8642 million tons in the same month last year, a year-on-year decrease of 1.3678 million tons.
• As of the end of the week, Brazil's corn exports in 2023 totaled 55.6739 million tons, an increase of 10.9776 million tons, or 24.56%, compared with last year's exports of 44.6963 million tons.

Source: ANEC, Cargonave, Reuters, Zijin Tianfeng Futures Research Institute

Cost of Imports: West US corn has an advantage over Brazilian corn

• As of the week of February 2, according to the latest data from Reuters shipping, Brazilian corn is expected to arrive in mainland China in February with a total of 823,500 tons.
• As of February 2, in the second half of the year, the arrival cost of imported Brazilian corn in February was about 2,112 yuan/ton, the arrival cost of West American corn in February was about 2,109 yuan/ton, and the transaction price of bulk grain in Shekou Port was 2,450 yuan/ton.

Source: Reuters, My Steel, Zijin Tianfeng Futures Research Institute

Domestic supply and demand

Weather conditions: precipitation concentrated in the sales area has little impact on the production area

• As of the week of February 2, affected by the cold wave weather, the temperature in Northeast China, eastern Inner Mongolia, northwest Huanghuai and other places was 1-4 °C lower, and the temperature in most of the rest of the country's agricultural areas was close to the same period of the year or 1-4 °C higher; There was a wide range of rain and snow in the central and eastern regions, with 5-10 mm of snowfall in the northeast of Northwest China, southwestern North China and northern Liaoning, and 10-50 mm of precipitation in the western part of Huanghuai, Jianghuai, Jianghan, Jiangnan and northern South China. Overall, last week's rain and snowfall in Northeast China and North China had an adverse impact on transportation.
• It is expected that in the next 10 days, there will be a wide range of rain and snow in the central and eastern regions, and the cumulative precipitation in Huanghuai, southern Jianghuai, southern Jianghan, Jiangnan, and South China will be significantly more than that in the same period of the year, and there will be less snowfall in Northeast and North China.

Data sources: Central Meteorological Observatory, Zijin Tianfeng Futures Research Institute

Port inventory: North port inventory is still at a low level

• As of the week of February 2, the corn inventory in the four northern ports totaled 1.233 million tons, a decrease of 36,000 tons week-on-week, and the port inventory was still at a historical low.

Data source: Zijin Tianfeng Futures Research Institute

Port inventory: Corn inventory in Guangdong port decreased month-on-month

• As of the week of February 2, the domestic and foreign trade corn stocks in Guangdong Port totaled 999,000 tons, a decrease of 21,000 tons from 1.02 million tons last week. Among them, the domestic trade corn inventory in Guangdong Port totaled 165,000 tons, an increase of 50,000 tons from last week, and the foreign trade inventory was 834,000 tons, a decrease of 71,000 tons from last week.

Data source: My Agricultural Products, Zijin Tianfeng Futures Research Institute

Feed demand: pig prices have risen and breeding profits have rebounded significantly

• As of the week of February 2, the average price of live pigs slaughtered in the country was 15.42 yuan/kg, up 1.29 yuan/kg from last week, up 9.13% month-on-month and 8.36% year-on-year. In terms of breeding profits, the profit of self-breeding and self-raising was -31.24 yuan/head, and the profit of purchased piglets was 103.2 yuan/head, and the profit of breeding rebounded significantly.
• Pig prices rose strongly last week, and the weekly center of gravity rose significantly. Approaching the Spring Festival, the situation of white strips is improving, the operating rate in the north is generally increasing, with the increase in demand for stocking during the Spring Festival, driving the price of frozen products to rise slightly; It is expected that this week's supply stock will be digested and the demand will gradually end, and the pig price may stabilize and consolidate.

Data source: My Iron and Steel, Zijin Tianfeng Futures Research Institute

Feed demand: Poultry farming profits

• As of the week of February 2, the weekly breeding profit of hairy chickens was 0.37 yuan/piece, and last week's -0.17 yuan/piece, an increase of 0.54 yuan/piece from last week. The weekly breeding profit of parent breeders was 1.27 yuan/piece, 0.65 yuan/piece last week, up 0.62 yuan/piece from last week. The weekly profit of laying hens was 27.74 yuan / piece, up 6.25 yuan / piece from last week.
• This week, the profit of broiler breeding rose month-on-month. On the one hand, the price of chickens has stabilized, and the profits of farmers have been guaranteed to a certain extent relative to the declining cost of breeding; on the other hand, the price of chicks in the early stage is low, and the cost of chicks has decreased by 29.11% month-on-month, and the cost is lower and the price of chickens has stabilized, and the profitability has improved. In terms of laying hens, egg prices rose first and then fell this week, boosted by the Spring Festival effect in the first half of the week, as the migrant workers in the sales area have returned to their hometowns, the domestic market has been launched, and the enthusiasm of downstream supermarkets has increased, and egg prices have risen. With the continuous rise in prices, the terminal is resistant to high prices, and traders are cautious in taking goods, and the price has weakened again, so the profit of breeding has risen first and then fallen.

Data source: Zijin Tianfeng Futures Research Institute

Feed enterprise inventory: inventory days increased slightly

• As of the week of February 2, the average corn inventory of sample feed enterprises was 31.26 days, an increase of 0.32 days or 1.02% week-on-week, and an increase of 5.23% over the same period last year.

Data source: My Agricultural Products, Zijin Tianfeng Futures Research Institute

Industrial demand: corn starch enterprise processing profits narrowed slightly

• As of the week of February 2, the profit of corn starch deep processing in Jilin was 103 yuan/ton, down 41 yuan/ton from last week, the profit of corn starch deep processing in Shandong was 104 yuan/ton, down 98 yuan/ton from last week, and the profit of corn starch deep processing in Heilongjiang was 108 yuan/ton, down 51 yuan/ton from last week. The profit of corn starch deep processing in Hebei was 176 yuan/ton, down 41 yuan/ton from last week.
• This week, corn starch processing profits have declined, but they are still profitable. The reason is that the price of raw corn rose slightly this week, the price of starch was stable, and the profits of starch enterprises narrowed slightly. Affected by the approaching Spring Festival holiday, it is expected that the price of corn starch in the market will not fluctuate much.

Data source: Zijin Tianfeng Futures Research Institute

Industrial demand: The operating rate of deep processing enterprises was flat month-on-month

• As of the week of February 2, the starch operating rate of 66 companies was 74.11%, unchanged from last week. Supported by the strong downstream demand performance and good profits before the Spring Festival, the operating rate of the corn starch industry remained high.

Data source: Zijin Tianfeng Futures Research Institute

Industrial demand: the consumption of deep processing enterprises decreased slightly month-on-month

• As of the week of February 2, the country's main 126 corn deep processing enterprises consumed a total of 1,377,300 tons of corn, a decrease of 8,800 tons from last week, of which, corn starch processing enterprises consumed 737,500 tons of corn, an increase of 00,100 tons from last week, amino acid enterprises consumed 203,700 tons, the same as last week, and alcohol enterprises consumed 436,100 tons, a decrease of 8,900 tons from last week.

Data source: Zijin Tianfeng Futures Research Institute

Industrial demand: corn inventories of deep processing enterprises rose month-on-month

• As of the week of February 2, the total corn inventory of 96 deep processing enterprises was 5.576 million tons, an increase of 0.32% from last week.
• Approaching the Spring Festival, the bullish atmosphere in the producing areas is getting stronger, some farmers are reluctant to sell grain, and plan to sell grain after the holiday, the arrival of deep processing plants has declined, the supply pressure has eased, and the rise in inventory has slowed down.

Data source: My Iron and Steel, Zijin Tianfeng Futures Research Institute

Industrial demand: The morning arrival volume of downstream deep processing plummeted month-on-month

• As of the week of February 2, the total number of vehicles in Shandong deep processing was 2,198, a decrease of 3,737 vehicles, or 62.96%, compared with 5,935 vehicles last week.
• Last week, the number of deep processing doors to the car plummeted month-on-month, the last week before the Spring Festival purchase and sales were light, and some deep processing enterprises announced a plan to stop harvesting; in addition, last week's rain and snow in North China also made logistics and transportation not smooth, lack of capacity. As a result, the number of arrivals in the morning has been greatly reduced.

Data source: Zijin Tianfeng Futures Research Institute

Starch demand: The prices of corn starch and by-products have stabilized overall

• As of the week of February 2, the price of corn starch was flat compared with last week, corn germ meal decreased by 20 yuan/ton compared with last week, corn gluten meal was flat compared with last week, and corn bran was flat compared with last week.
• Last week, there were no market highlights for corn by-products, and the manufacturer's quotation was stable. The actual transaction orders in the protein powder and fiber market during the week are not much, and the downstream feed mills have basically entered the Spring Festival holiday, and the market is still unclear after the year, and the willingness to buy is not strong, so the price is mainly stable.

Data source: Zijin Tianfeng Futures Research Institute

Starch demand: the downstream operating rate of corn starch

• As of the week of February 2, the operating rate of F55 fructose syrup was 75.47%, down 0.66 percentage points from last week, and the peak season was basically at the top, and even had a downward trend compared with the previous period, resulting in the start of construction did not continue to rise; the operating rate of maltose syrup was 65.96%, an increase of 0.68 percentage points from last week, and sporadic large factories started production, supporting the increase in operating rate; the operating rate of corrugated paper was 55.96%, down 5.17% from last week; and the operating rate of containerboard was 57.7%, down 5.82% from last week.

Data source: Zijin Tianfeng Futures Research Institute

Basis: Corn spot price and basis trend

• As of February 2, the average spot price of corn was reported at 2,366 yuan/ton, and the basis difference between the average spot price of corn and the active contract price was -48 yuan/ton.
• In terms of basis, the basis of corn fluctuated downward last week. The spot end of corn rebounded slightly, and on the disk side, the main contract ushered in a phased rebound after a large decline in the early stage, with a maximum rebound to 2410 yuan, a weekly increase of 2.43%, so the basis fluctuated downward. It is expected that the spot price will stabilize this week, the disk may fluctuate slightly, and the basis may stabilize the operation.

Data source: Zijin Tianfeng Futures Research Institute

Spread: Corn spread

• As of the week of February 2, the corn futures spread structure was 2403 at a discount of 2405 and 2405 at a discount of 2409.
• Overall, compared with May, the new grain sales pressure in March is greater, and the weather gradually warms up after the Spring Festival, and the new grain is not easy to store, so farmers will sell the remaining grain in a centralized manner, so the 03 contract is discounted 05 contract. September is the period when the old and new corn are not connected, the consumption of the old crop is basically over, the new crop has not been harvested on a large scale, the market is in a period of less supply pressure, and the demand is also in the transition period from light to strong, so the contract price in September is stronger than in May, and the 05 contract is discounted 09 contract.

Data source: Zijin Tianfeng Futures Research Institute

Substitutes: Yumai spreads increased month-on-month

• As of February 2, the average price of wheat market was 2755 yuan/ton, the average price of corn market was 2366 yuan/ton, and the price difference between wheat and corn was 389 yuan/ton, up 7 yuan/ton from last week.
• Last week, the price of wheat in the market fluctuated upward, and the market bought and sold positively. With the approach of the Spring Festival, the shipment of flour and by-products of flour enterprises has improved slightly, and the flour enterprises with low inventory have slightly raised prices to promote income.
• As of the end of December, the mainland imported 579,100 tons of wheat that month, down 9.53% month-on-month and 45.75% year-on-year; From January to December, a total of 11.8783 million tons of wheat were imported, an increase of 20.31% year-on-year.

Data source: Zijin Tianfeng Futures Research Institute

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