[Viewpoint] Guangzhou Futures: Corn and starch spot prices, especially in the North China production area, are accelerating their decline

For corn, due to the pressure of new product launches and the increase in national reserve investment, corn spot prices continue to fall towards new product pricing, and futures prices, especially in recent months, have continued to decline driven by spot prices. Analyzing the market, two points can be seen. Firstly, the futures price continues to be pegged to the spot price, indicating that the pressure of new products still needs to be released, which is intuitively reflected in the trend of spot prices; The second is the transition from a distant month to a rising structure, which means that the next focus will be on whether the market can enter the stage of replenishing inventory. This can be divided into two forms: actively replenishing inventory needs to wait for the market to recognize the new corn production and demand gap before starting; Passive replenishment is more driven by other factors. Among the three aspects that can be expected before, the market is not worried about the issue of new and old crop inventory (the market is still squeezing out old crop inventory), wheat lacks feed substitution and continues to be sluggish, leaving only hope for national storage. In summary, we maintain a neutral view and recommend investors to wait and see for now, and wait for the spot market to stop falling before entering the market.

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.