Since October, the scope of domestic new season corn marketing has gradually expanded, and the overall shock of corn prices has bottomed out, while there are differences in supply in different regions, prompting a slight rebound in local corn prices inside and outside the customs. However, in the face of the peak period that northeast corn may usher in in November, grain prices lack a clear incentive to strengthen.
The curtain has not yet been lifted on farmers' marketing
Judging from the harvest progress, the harvest progress in various regions of Heilongjiang this year is uneven, and the corn harvest in Liaoning is generally delayed, or it will affect the progress of new grain marketing, except for the eastern part of Heilongjiang, most farmers have not yet begun to sell new grain.
Although from a psychological point of view, the rise in grain prices and returns this year are far less than last year, the author believes that this will not affect the habit of farmers to sell grain after harvest, and the key lies in the follow-up cooling progress. At present, the probability of large-scale frosting of corn in the northeast in November is high. Judging from the current weather and harvest production, the harvest time of new grains in northeast and north China this year is late, which may be superimposed and concentrated, and in the case of large moisture and high temperatures, it is not conducive to the storage of tide grain, and there is a stage of grain sales pressure on corn.
In addition, at this stage, most parts of the country such as northeast China and north China have begun to use new season corn, but for grain enterprises in the south, batch procurement is still wait-and-see. From the perspective of quality, this year's northeast corn is overall better than north China.
The probability of grain prices rising and falling in the northeast is equal
It has been observed that the probability of corn prices rising in the northeast in November has improved, but it is basically at the average level, and relatively speaking, it is more likely that food prices will bottom out in December. Mainly because November is usually the peak period for the first batch of corn in northeast China to be listed intensively, the supply is abundant and the price is under pressure, and correspondingly, December is more likely to bottom out. However, there have also been cases in history when the temperature could not drop below zero degrees Celsius in November, the corn could not be threshed and dried in batches, and the supply pressure was released in December.
The volume of corn imports increased significantly
According to customs statistics, China imported 3.53 million tons of corn in September 2021, an increase of 2.45 million tons year-on-year; from January to September, China imported 24.92 million tons of corn, an increase of 18.26 million tons year-on-year, an increase of 274%. In 2020/2021 (October/September), China imported 29.55 million tons of corn, an increase of 289% year-on-year. By country, since 2021, China has imported 14.28 million tons of corn from the United States, accounting for 57% of total imports; 7.03 million tons of corn from Ukraine, accounting for 28% of total imports. The sharp increase in imported corn and the abundant short-term supply also have a bearish impact on the market.
Bearish expectations are stronger this year
Since the listing of autumn grain this year, downstream grain enterprises have strong bearish expectations. On the one hand, there are still some old grain carry-overs in the market, and local processing enterprises in the northeast have certain corn stocks in their hands, the operating rate is insufficient, the willingness to purchase is not strong, and more low inventory is adopted to pick up new grain, and no longer raise prices to grab grain. Affected by the "double limit" policy, most of the deep processing enterprises in North China are in a semi-suspended state, the market expectations are pessimistic, the willingness to grab grain and build stocks is low, the demand for corn is weakened, and most of the enterprises are bearish on the future market, and the enthusiasm for replenishing the warehouse is low.
On the other hand, due to the decline in pig prices, feed breeding enterprises generally suffer losses, and it is difficult for high-priced raw materials to be transmitted downstream. On October 20, the National Grain Trading Center held wheat auction sales, most of the grain source reserve price is about 2,000 yuan / ton, far lower than the current market price, enterprises rush to buy actively, will continue to replace some of the feed corn, to bring it a negative impact.
Energy supply may affect drying
On the evening of October 19, the National Development and Reform Commission played a heavy "combination of fists": studying the implementation of intervention measures for coal prices in accordance with the law; organizing and holding a symposium on ensuring supply and price stability for key enterprises in coal, electricity, oil and gas transportation; and investigating and emphasizing the strengthening of supervision in accordance with the law and strictly investigating and punishing capital malicious speculation in thermal coal futures.
From the perspective of market psychology, coal prices have peaked, but for corn that needs to be dried with coal in winter, the specific impact needs to be further observed.
It is understood that in the current high national coal price operation, a large number of coal in the northeast is transported, the cost of corn drying has risen from 40 to 60 yuan per ton last year to 120 yuan, and some regions have even begun to consider other alternative ways of drying, such as burning straw. If the northeast tide grain is harvested as scheduled after November, the batch drying progress of corn is slower, and the corn market inside and outside the customs may continue to be disturbed.
Overall, due to the lack of obvious power support, with the further expansion of the harvest range in China's new corn-producing areas, the bottom of corn prices will also be consolidated. In the future, the pace of new corn listing in northeast China, the scale and substitution price of imported grains, and the recovery rate of aquaculture feed consumption are worthy of attention.
This article is derived from the grain and oil market report