Guangzhou Futures: Corn and Starch: Waiting for Pressure Release from New Products

Over the weekend, the spot corn was mainly adjusted in a stable manner. Most of the production areas in North China rose, while those in Northeast China were weak in a stable manner, and the ports in North China rose slightly; Corn futures prices fluctuated strongly in Friday night trading, with all contracts closing slightly higher. For corn, the current market is gradually showing positive signs, including the rise in wheat prices in North China and the purchase of reserves in Northeast China, which may drive some mid to downstream trade and demand enterprises to enter the market for inventory. However, considering that the pressure of new production still needs to be released, and market expectations have not yet turned to the expectation of a shortage of supply and demand for new production, the market may still be in a passive destocking stage to resolve the pressure of new production going public, and has not yet entered the active inventory replenishment stage. At this delicate stage, it is recommended to focus on the trend of spot goods, as it corresponds to the release of new production pressure. In this situation, we maintain a neutral view for the time being and suggest that investors take a wait-and-see approach.

For starch, the three factors that affect the price difference between starch and corn are undergoing changes. The by-products are still favorable, while the raw material side is shifting towards excess. Due to the rebound of corn in North China before and after the National Day holiday, while corn in Northeast China continues to be weak, the price difference between North China and Northeast China corn is expected to expand; The industry's supply and demand have shifted towards a bearish trend, as industry inventories have begun to rebound and downstream operating rates have decreased. Considering the spot basis and the processing profit of the market, we tend to limit the space for narrowing the price difference between starch and corn. In this situation, we maintain a neutral view for the time being and suggest that unilateral investors adopt a wait-and-see approach. Arbitrage investors can hold the starch corn price difference to expand their arbitrage.