With the Fed announcing a 50 basis point interest rate cut, monetary easing expectations strengthened, the dollar index weakened, and gold prices continued to hit record highs, but United States interest rates after the rate cut are still at a high level, and the global economic downturn is still large. Constrained by the fundamentals of supply and demand, the trend of commodities has not kept pace with gold prices, and the overall trend is still weak. Due to the current strong supply and weak demand in the domestic grain market, and the fourth quarter is in the period of concentrated autumn grain listing, it is expected that the trend of grain prices will remain stable, and it is difficult to fluctuate significantly.
Rice or entrusted city purchase support
After October, the domestic middle and late rice will begin to be harvested on a large scale and enter the peak period of marketing. Among them, the large-scale harvesting time of middle rice in the middle and lower reaches of the Yangtze River is from early to late October, and the large-scale harvesting time of double-cropping late rice in the south is mid-to-late October.
According to the analysis of the current rice yield, it is expected that the yield of middle and late rice in China is more likely to increase. At present, a large number of new medium rice in some areas of the south have begun to be listed, and the purchase price is low and has been near the minimum purchase price, and the purchase price of old rice in some areas of Heilongjiang is also hovering around the minimum purchase price.
Domestic demand for rice has continued to decline due to the declining population year after year, the aging of the population, the sharp decrease in the number of people working hard due to economic transformation, and the significant increase in the domestic price ratio of rice to wheat and corn.
International rice prices have also continued to weaken since the beginning of the year as supplies improve. At present, the quotation of parboiled rice with a 5% breakage rate in India is at its lowest point since mid-January, and the price of rice in Thailand has fallen to the lowest level in more than a year. After the India government lifted the basmati rice export floor price in September, rice export restrictions were further relaxed, and new rice, a major rice producer in Asia, will be listed in large quantities in October, and it is expected that international rice prices will continue to decline, and the domestic and foreign rice price gap is likely to reverse, and it is not ruled out that domestic rice imports will rebound in the fourth quarter.
Affected by the above factors, it is expected that the domestic rice market will stabilize and weaken, and it is more likely that the minimum purchase price plan will continue to be launched, and the scope and purchase volume of the start plan may increase compared with the previous year. The decline in the rice market is expected to be limited, supported by the minimum purchase price policy.
There is little room for wheat to continue to fall
This year's winter wheat output has increased, the quality is better than that of the previous year, and the supply is looser than that of the previous year; The current demand for flour, like rice, continues to be sluggish; Low maize prices have also led to a significant reduction in demand for wheat substitution. During the same period, the international wheat market continued to weaken, and wheat imports increased year-on-year. From January to August, the mainland's wheat imports reached 10.38 million tons, an increase of about 9.5% year-on-year.
Summary of China and global wheat and corn imports (10,000 tons)
In 2023, the domestic wheat production will be reduced, and the quality will be poor, and more than 30 million tons of germinated wheat will enter the feed field, which will relatively reduce the supply of wheat in the market, but the price of wheat will still show a high downward trend. In 2024, the wheat market will be strong in supply and weak demand, wheat prices will naturally fall endlessly, and it is expected that the above factors will not change significantly in the fourth quarter, unless the international wheat price rises sharply, the domestic wheat market will remain sluggish.
United States Wheat CFD Weekly Chart (cents/bushel)
However, after a continuous decline, domestic wheat prices have now fallen to near the lowest purchase price, and there is little room for further decline in the fourth quarter. The latest minimum purchase price of wheat in 2025-2026 is 1.19 yuan/jin, an increase of 0.01 yuan/jin over 2024, which will be good for the wheat market.
The corn market is likely to fluctuate slightly
This year, the autumn grain growth on the mainland is normal, and the corn harvest is expected to be strong. Affected by the continued rainy weather in September, the corn production may be lower than expected, but the overall supply will still be good. Corn imports declined due to low domestic corn prices.
From January to August, the mainland's corn imports totaled 12.57 million tons, a year-on-year decrease of about 15.7%, but the import of coarse grains such as barley increased significantly. From January to August, a total of 5.81 million tons of sorghum were imported, an increase of 82.5% year-on-year. From January to August, a total of 10.87 million tons of barley were imported, an increase of 75.4% year-on-year. From January to August, the total import of coarse grains was 29.25 million tons, an increase of 4.96 million tons year-on-year, much higher than the decrease in corn imports, and the overall supply of corn market was still relatively loose.
At present, the demand for feed corn is relatively insufficient, and the poor economy has also led to a relatively low demand for deep-processed corn. At present, all parties are cautious in purchasing, and the trend of new corn is weak. At present, after the new corn market in Hubei and other regions, the price is low and low, but the corn market does not have to be too pessimistic in the later stage.
At present, the price of live pigs is high, the breeding industry is still in the expansion range, and it is expected that the stock will increase in the later period, and the demand for feed will increase. As the current domestic corn prices have fallen to a low position, it is expected that the fourth quarter corn prices continue to decline little space, if the demand for corn in the later period improves, do not rule out the possibility of a slight rebound under the influence of the news, but the rebound is highly limited.
United States Corn CFD Weekly Chart (cents/bushel)
At present, the supply of grain in the domestic market is relatively loose, and the demand is generally sluggish. Before the Fed continues to cut interest rates more than expected and the monetary policy is truly easing, it is expected that the domestic grain market will remain weak in the fourth quarter, and the local lows may rebound.
To learn more, please click on the link below to visit the CME Group's Soybean Futures page: https://www.cmegroup.cn/soybean/