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The "cliff-like decline" in corn prices has attracted widespread attention. According to data from commodity analysis agency Zhuochuang Information, as of February 7, 2024, the average price of corn in China was 2275.87 yuan/ton, down 144.14 yuan/ton from the beginning of the year, a decrease of 5.96%, reaching the lowest price in the past three and a half years. This price movement is mainly due to oversupply and insufficient demand. The domestic new season corn has been bumper for many years, the output has increased, and the amount of imported corn has also continued to grow, making the supply of corn relatively abundant. On the demand side, the demand increment of corn deep processing industry is limited, although the feed industry has rigid demand, but with the increase in the use of soybean meal, wheat and other substitutes, the demand for corn has also decreased.
This price drop isn't all bad. After the Spring Festival, with the steady progress of corn trade, traders build warehouses and warehouses, demand increases, market supply pressure will gradually ease, and corn prices are expected to rebound to a certain extent in the future. In addition, March and April every year is the time period for farmers to concentrate on corn sales, and with the advent of the peak season for corn market purchase, the demand is expected to further increase.
The decline in corn prices is also good news for the breeding side. As an important energy raw material for feed, the decline in the price of corn has directly led to a decrease in breeding costs. In the feed composition, corn accounts for about 30%-55%, and the feed cost accounts for about 70% of the cost of the terminal breeding industry. However, in 2024, the pig market will still be dominated by de-capacity, and the decline in overall pig production capacity will lead to a decline in feed production capacity, which in turn will lead to limited room for corn feed demand.
While the decline in corn prices may put some pressure on farmers and the corn industry in the short term, in the long term, it may be an opportunity for the industry to adjust and rejuvenate. With the gradual adjustment of the market and the rebalancing of supply and demand, corn prices are expected to gradually stabilize and recover. Therefore, for the corn industry and related industries, the current decline may be a positive sign, indicating a future recovery and the healthy development of the industry.