Corn: At the peak of pessimism or when the market hits bottom

The weak demand for feed, the continuous clearance supply of aged grains, the auction of imported corn, and the upcoming large-scale listing of new grains are jointly impacting the already fragile corn spot market. After reaching more than 1000 vehicles for five consecutive days, Shandong's deep processing reached a record high of 2683 vehicles on the 24th. The purchase prices of Shandong's deep processing enterprises have been continuously lowered, and it is no longer a small knife cutting meat, but a direct approach. Shengtai Pharmaceutical has broken through the "1" first, and other deep processing companies are also on the road to "1".

The corn market in North China has fallen into a vicious cycle of "selling more and selling more, and selling more and more". Currently, it should be the stage with the greatest pressure in the North China market. The expectation of a stagnant market for green and yellow crops has been dashed, and it has become a concentrated supply of old grains. At the same time, it is caught at the node of comprehensive harvesting and listing of new grains. The old ones have not gone, and the new ones have come again, resulting in the current situation of continuous decline in deep processing in North China. Everyone knows the characteristics of deep processing in North China. Pricing is based on quantity, and currently it is a crazy pattern of increasing quantity without decreasing price. After the decrease in quantity in the later stage, the price will naturally stabilize and rise.

Since the beginning of this year, the regional circulation of corn has significantly weakened, making it difficult for the sharp decline in North China to spill over. Although the national market for corn still shows signs of decline, prices in Northeast, Northwest, and Nangang are still based on local supply and demand conditions. The record 2683 units arriving in Shandong have not caused a major impact on the market. On the one hand, the market is mostly priced against negative factors, and on the other hand, there is resistance to decline supported by planting costs. Therefore, from a side view, the panic in the North China market is only localized and phased. Referring to this year's Xinjiang market, there must be brave men under low prices. The price won't keep falling, it's just that if it falls to a psychological level, there will always be people buying at the bottom.

The halt in the decline of corn futures on September 24th was also influenced by the overall atmosphere of commodities. The central bank will soon lower the reserve requirement ratio by 0.5 percentage points, lower the interest rate of existing housing loans, and a series of policy measures, which have triggered the rise of the stock market and commodities. Corn futures also showed signs of stopping the decline, but based on the current loose supply and demand fundamentals, the rise is slightly weak. Futures have a guiding role in spot trading. In the midst of pessimism in the corn industry, it is particularly important to first stop the decline and ease emotions. The easing of emotions will have a positive effect on the current corn market where traders are watching and not actively buying and selling. In addition, corn futures are currently showing a far month premium structure, which to some extent indicates that the market is not particularly pessimistic about forwards. Once the mood changes, driven by the emotion of "buying up, not buying down", the behavior of buying at the bottom and pulling up may reappear.

At present, the bearish factors in the market are basically clear, and new grains are gradually being weighed, with a significant decrease of 200-500 yuan/ton year-on-year. Further price declines in the future require sustained panic selling or continued weak demand, and the probability of these two occurrences needs to be judged by the observers themselves. During the panic driven crazy decline in the market, the bullish factors are sometimes overlooked. Currently, the import volume of corn has shown a clear downward trend, with only 430000 tons imported in August. Wheat prices are higher than corn prices, causing wheat to lose its substitution advantage and returning the original substitute feed demand to corn. After the new season of corn is launched, the mentality of farmers and traders to sell and hoard grain is still unknown.

Overall, there is both pressure and support in the current market. When pessimism reaches its extreme, it may be the time when the market hits bottom. Pay attention to whether the market can stop falling and stabilize after this sharp decline. Pessimists are correct, while optimists move forward.