Corn and starch: significant ｄｒｏｐ in futures prices

The performance of corn spot prices is differentiated, with stable and mostly rising prices in North China and Northeast China production areas, and slight declines in ports in the north and south. Futures prices continue to be weak, with recent months relatively weaker than far months. For corn, the biggest concern in the current market is the sustainability of the rise in spot prices corresponding to the replenishment of inventory in the context of the concentrated listing of new products. However, in our opinion, the structure of the monthly premium for futures prices reflects the market's relatively optimistic supply and demand expectations for the current year. The Northeast production area has driven the continuous stability and rise of spot prices at ports in the north and south, indicating that the lowest point of spot prices corresponding to the maximum pressure of new products has already appeared. In the future, driven by potential favorable factors such as national storage increase, wheat rise, and low inventory of corn in domestic and foreign trade of southern ports, the spot prices may even enter the replenishment stage, and futures prices are expected to gradually fluctuate upward. In this situation, we maintain a cautious bullish view and recommend investors to hold long positions in the early stages.

Starch spot prices are stable but slightly weak, with prices in some areas decreasing by 10-30 yuan. The overall futures price has fallen, and it is relatively weaker than corn. The price difference between starch and corn has narrowed slightly. For starch, the recent price difference between starch and corn has not changed much, mainly due to the short-term bearish supply and demand and raw material costs in the industry. The supply and demand side of the industry has rebounded due to the continuous decline in industry inventory in the early stage, while the raw material cost side has narrowed due to the recent continuous decline in corn prices in North China and Northeast China. However, due to the low level of by-products and high starch base, as well as negative processing profits on the market, we tend to limit the space for narrowing the price difference between starch and corn. In this situation, based on the judgment of raw material corn, we maintain a cautious bullish view and recommend that unilateral investors hold long positions, while arbitrage investors continue to hold the starch corn price difference for further arbitrage.