The improvement in demand is difficult to match the supply pressure, and the action capability on corn is not satisfactory

Entering the fourth quarter, with the decrease in temperature, there is a seasonal increase in the feed intake of downstream poultry and livestock, which benefits the consumption of corn for feed. However, the recent improvement in terminal breeding and deep processing profits is due to the cost dividend brought by the increase in corn production and the weakening of prices in the new season, which also reflects to some extent the pressure on the supply of new season goods in the market.

The demand for corn feed in the fourth quarter is expected to improve, coupled with an increase in profitability and operating rates in the deep processing industry, resulting in an overall improvement in downstream demand for corn. But currently it is still in the period of increasing corn production in the new season, and the supply increment may drag down the upward space of corn prices or be limited.

Fourth quarter demand improves, corn consumption may increase

The third quarter is in the off-season of traditional feed consumption, with weak demand for corn feed. Entering the fourth quarter, with the decrease in temperature, there is a seasonal increase in downstream poultry and livestock feed intake, which is favorable for corn feed consumption. Currently, the terminal breeding profit remains at a preferred level, and there may be expectations of an increase in inventory. However, the price advantage of substitutes is not good, which may further improve corn feed consumption.

In terms of the deep processing industry, driven by the concentrated listing of new season corn and the increase in supply of trendy grains at lower prices than aged grains, the overall profitability of the industry improved significantly in October compared to September, and the industry's enthusiasm for starting production increased, which may drive the demand for deep processing of corn to improve. From the perspective of comprehensive downstream demand, there may be expectations of increased demand for feed and deep processing in the fourth quarter, which will to some extent benefit corn prices.

The new grain is still in the stage of concentrated increase in quantity, and the market supply pressure is relatively high

Although the demand side shows a preference, the recent improvement in terminal breeding and deep processing profits is due to the cost dividend brought by the increase in the volume of new season corn and the weakening of prices, which also reflects to some extent the pressure on the supply of new season goods in the market.

The overall harvesting progress of the production area this year is relatively slow. Due to the significantly lower opening price of corn in the new season compared to the same period last year, farmers' intention to sell grain is not high, but there is no intention to build a warehouse in the intermediate trade link. Downstream feed and deep processing enterprises are maintaining a rolling replenishment rhythm, and the overall supply of corn is still relatively high. Data shows that on October 28th, the number of vehicles received by Shandong deep processing enterprises in the morning was 1743, an increase of 976 vehicles compared to the same period in September, with a growth rate of 127.25%. This shows the pressure on market supply.

The average price of corn in November may increase, but the increase may be limited

At present, the inventory level of corn in feed enterprises is relatively low compared to the same period last year, and some production areas have tight conditions for ignition and transportation. The purchasing intention of enterprises may increase, coupled with the positive enthusiasm of the deep processing industry to start production. The overall downstream demand for corn may still have some positive support, and there is room for upward movement in corn prices in November. However, in the short term, it is still in the peak period of new season corn production, and the supply is relatively loose, which may limit the price increase of corn. Focus on the intention of grassroots grain sales in production areas and policy guidance in the later stage.