Imported Starch Guangzhou Futures: Corn and Starch: Spot Prices Drop Towards New Products

For corn, as the market expects traders to clear old crop inventory and increase reserve investment, there is no longer a concern about the connection between new and old crops, and corn spot prices have fallen towards new crop pricing. In this situation, the futures price remains weak driven by spot prices, and the next upward trend needs to wait for the following four aspects: first, whether North China wheat can become stronger; second, whether the middle and lower reaches need to passively replenish inventory before new products are launched; third, whether the country will enter the market early to collect inventory; fourth, whether market concerns about the production prospects of new products can be strengthened, which will then trigger optimistic expectations for the supply and demand pattern of new products, and drive the middle and lower reaches to actively replenish inventory. In summary, we maintain a neutral perspective and recommend investors to take a wait-and-see approach for now.

For starch, the recent fluctuation and lack of directional guidance in the price difference between starch and corn are mainly due to the long short competition between raw material costs and industry supply and demand. That is, raw material costs, including spot corn in North China, continue to be weak, while industry supply and demand tend to improve and industry inventory continues to decline. Considering the low prices of by-products and the high spot price difference of starch, as well as the negative production profit of the market, the space for narrowing the price difference between starch and corn may be limited. In summary, based on maintaining neutrality in raw material costs, investors are advised to take a wait-and-see approach, while at the arbitrage level, they can hold onto expanding the starch corn price difference.