Corn: Storage supports upward trend on the market

Core viewpoint: Neutral excess. The grain export volume of Ukraine in 2023/24 was 50.826 million tons, an increase of 3.2% from the previous year's 49.236 million tons. The export volume of corn was 29.389 million tons, compared to 29.228 million tons in the previous year. Last week, the temperature anomaly in the main corn producing areas of Brazil was relatively high, with less precipitation in the central region compared to previous years and less precipitation in the southern region. This week, it is expected that the temperature in the main corn producing areas of Brazil will still be high, with more precipitation in Rio Grande do Sul and more precipitation in the central corn producing states of Mato Grosso and Parana. The planting rate of corn in Brazil for the year 24/25 is 25.9%. The crop progress report released by the US Department of Agriculture shows that as of October 11th, the US corn yield rate was 64%, up from 64% last week and 53% in the same period last year.

Last week, the price performance of corn in the national market was inconsistent. The price of corn in Northeast China is weak and stabilizing. New grain from eastern Heilongjiang has been launched one after another, with a concentrated increase in the quantity of trendy grain. The amount of goods received by deep processing enterprises has increased, and prices have been gradually lowered. Corn prices in North China are running strong. Currently, most of the corn harvest in North China has been completed, and the market supply pressure has significantly weakened, leading to a noticeable increase in farmers' reluctance to sell. The quotations of port trading enterprises in the sales areas of East China and South China have followed the downward trend of prices in North Port. There is no stock available in the areas along the Yangtze River, and pre-sales will begin in November. The grain prices in Northwest and North China have oversold in the early stage, and in addition, the logistics of grain in Xinjiang have been hindered, which has supported prices. The grain prices in Northwest and North China in Southwest China have risen.

Last week, pig prices fluctuated upwards. On the supply side, the price of live pigs has rebounded, while the price of fattened pigs has risen. Farmers are increasing the weight of their pens, and large-scale farms are mainly controlling the operation of releasing pigs from pens. The source of pigs for secondary fattening and supplementary pens is mostly standard pigs, and the proportion of small weight pigs being sold continues to decrease slightly; On the demand side, downstream demand weakened after the holiday, causing slow delivery of goods by slaughter enterprises and manufacturers, resulting in a decrease in production. The demand for frozen products in the market is weak, and downstream traders have low enthusiasm for purchasing goods. It is expected that the market will experience a dual increase in supply and demand this week, with a narrow range of fluctuations overall. In terms of deep processing, the profit of corn starch processing has improved, the operating rate of corn starch enterprises has slightly increased month on month, and the consumption of corn has increased month on month. Focus on the profit changes and start-up changes of deep processing enterprises in the future.

Overall, last week's corn main contract fluctuated upwards, reaching a high of 2229 yuan/ton. On the one hand, the regulated storage of new season corn in Northeast China has begun, which has boosted market confidence to a certain extent; On the other hand, the processing profits of deep processing enterprises have recovered, and the consumption of corn is about to enter the traditional peak season. Secondly, the overall macro sentiment has improved month on month, which to some extent benefits corn prices. Therefore, overall, the 2501 contract showed a fluctuating upward trend last week. This week, we need to focus on the acquisition prices of new claims by deep processing enterprises and the overall improvement of market sentiment. We should also pay attention to the implementation of storage policies and the release of incremental policies, as well as the rebound strength of the corn 2501 contract.

Origin: In 2023/24, Ukraine's grain exports were 50.826 million tons, an increase of 3.2% from the previous year's 49.236 million tons. The export volume of corn was 29.389 million tons, compared to 29.228 million tons in the previous year. Last week, the temperature anomaly in the main corn producing areas of Brazil was relatively high, with less precipitation in the central region compared to previous years and less precipitation in the southern region. This week, it is expected that the temperature in the main corn producing areas of Brazil will still be high, with more precipitation in Rio Grande do Sul and more precipitation in the central corn producing states of Mato Grosso and Parana. The planting rate of corn in Brazil for the year 24/25 is 25.9%. The crop progress report released by the US Department of Agriculture shows that as of October 11th, the US corn yield rate was 64%, up from 64% last week and 53% in the same period last year.

Domestic supply: Neutral. Last week, the price performance of corn in the national market was inconsistent. The price of corn in Northeast China is weak and stabilizing. New grain from eastern Heilongjiang has been launched one after another, with a concentrated increase in the quantity of trendy grain. The amount of goods received by deep processing enterprises has increased, and prices have been gradually lowered. Corn prices in North China are running strong. Currently, most of the corn harvest in North China has been completed, and the market supply pressure has significantly weakened, leading to a noticeable increase in farmers' reluctance to sell. The quotations of port trading enterprises in the sales areas of East China and South China have followed the downward trend of prices in North Port. There is no stock available in the areas along the Yangtze River, and pre-sales will begin in November. The grain prices in Northwest and North China have oversold in the early stage, and in addition, the logistics of grain in Xinjiang have been hindered, which has supported prices. The grain prices in Northwest and North China in Southwest China have risen.

Feed demand: bearish. Last week, pig prices fluctuated upwards. On the supply side, the price of live pigs has rebounded, while the price of fattened pigs has risen. Farmers are increasing the weight of their pens, and large-scale farms are mainly controlling the operation of releasing pigs from pens. The source of pigs for secondary fattening and supplementary pens is mostly standard pigs, and the proportion of small weight pigs being sold continues to decrease slightly; On the demand side, downstream demand weakened after the holiday, causing slow delivery of goods by slaughter enterprises and manufacturers, resulting in a decrease in production. The demand for frozen products in the market is weak, and downstream traders have low enthusiasm for purchasing goods. It is expected that the market will experience a dual increase in supply and demand this week, with a narrow range of fluctuations overall.

Deep processing demand: In terms of neutral deep processing, the profit of corn starch processing has improved, the operating rate of corn starch enterprises has slightly increased month on month, and the consumption of corn has increased month on month. Focus on the profit changes and start-up changes of deep processing enterprises in the future.

Alternative situation: In terms of excessive substitutes, wheat prices rose month on month last week, and the price difference between jade and wheat slightly expanded to 284 yuan/ton. Wheat replacing corn no longer has a price advantage.

Weather situation: Neutral. It is expected that in the next 10 days, except for the southwestern and southeastern coastal areas, most parts of China will have less precipitation and temperatures close to or 1-3 ℃ higher than usual. Most parts of the north will have sunny weather, which is conducive to promoting the autumn harvest and planting process.

Foreign origin situation

USDA: US Corn Supply and Demand Report for October

On October 12th, the USDA released its October supply-demand balance report, which showed an increase of 60000 tons in exports to 58.23 million tons in the US corn 23/24 vintage balance sheet; Domestic consumption increased by 1.18 million tons to 322 million tons, resulting in a corresponding reduction of 1.3 million tons in ending inventory and a decrease of 0.46% in inventory to sales ratio.

In terms of new works, the expected corn yield for the 2024/2025 fiscal year in the United States in October is 183.8 bushels per acre, and in September it is expected to be 183.6 bushels per acre, an increase of 0.2 bushels per acre compared to the previous month; The expected corn production for 2024/2025 is 15.203 billion bushels, with a September forecast of 15.186 billion bushels, an increase of 17 million bushels compared to the previous month; The total supply of corn is expected to be 16.989 billion bushels, with an expected 17.022 billion bushels in September, a decrease of 33 million bushels compared to the previous month; The expected ending inventory is 1.999 billion bushels, and the expected September inventory is 2.057 billion bushels, a decrease of 58 million bushels compared to the previous month. The report has raised the yield of new corn crops, indicating that the current weather conditions for new crops are still relatively optimistic, and the market may face further pressure in the future. In addition, exports increased by 25 million catties month on month, indicating that other exporting countries besides China, such as Mexico and unknown destinations, still have significant export demand.

United States: Corn Export Situation

On the week of October 11th, the net sales of corn exports from the United States for 2024/2025 were 1.222 million tons, compared to 1.684 million tons in the previous week, a decrease of 462000 tons compared to the previous week; The total export volume of US corn is 4.465 million tons, with an outstanding sales volume of 13.184 million tons.

US: Situation of US corn exports to China

During the week of October 11th, the United States shipped 1.059 million tons of 2024/2025 corn exports, compared to 1.17 million tons the previous week; The United States shipped 3000 tons of corn to China (mainland region), and the previous week's shipment to China was 0 million tons, an increase of 3000 tons month on month, with a cumulative sales volume of 6000 tons to China.

As of the week ending October 11th, the long position of US corn was 206300 lots, an increase of 10900 lots compared to the previous week; Short positions of 266100 lots decreased by 60000 lots compared to last week.

As of the week ending October 11th, the net short position was 72000 lots, a decrease of 68300 lots compared to the previous week, indicating a decrease in short selling willingness. The lowest price of the CBOT corn main contract this week was 415.25 cents per bushel, and the highest price was 428.00 cents per bushel.

USDA: Brazilian Corn Supply and Demand Report for October

In October, according to the latest USDA estimate, Brazil's corn production for 2023/2024 remained unchanged at 122 million tons. The estimated corn export for 2023/24 is 46 million tons, a decrease of 2 million tons compared to September; The corn production for 2024/25 remains unchanged at 127 million tons, with an estimated export of 49 million tons.

Overall, the latest USDA report maintains an optimistic outlook on the production of old works, while in terms of new works, it believes that the drought is not enough to reduce production, and may even increase production by 5 million tons compared to last year. This indicates that Brazil's production of new works continues to grow, and exports remain high. This also suggests that Brazil will continue to maintain high export expectations with cost advantages, and production will remain at a high level. The overall supply conditions for new works are still relatively loose.

Brazil: Central corn producing region expected to experience high temperatures and heavy rainfall next week

During the week of October 11th, the temperature in the main corn producing areas of Brazil was above average, with less precipitation in the central region compared to previous years, and less precipitation in the state of Rio Grande do Sul; NOAA predicts that temperatures in Brazil's corn producing states will remain high in the next 6-10 days, with more precipitation in Rio Grande do Sul and more precipitation in Mato Grosso and Parana states in central Brazil.

Brazil: Slow sowing of new corn crops

As of the week of October 11th, the progress of planting corn for the 2024-2025 crop year was 25.9%, slightly slower than last year.

According to the national average level weighted by the total sowing area of states such as GO, PI, TO, SP, MG, MA, MS, MT, and PR, the growth and development stage of the new crop of corn accounts for 76.1%, and the germination stage accounts for 23.9%.

Brazil: Weekly corn exports increase month on month

According to Anec Brazil's latest estimate, Brazil's corn exports from October 6th to October 12th were 1.7989 million tons, up from 1.0828 million tons last week, an increase of 716100 tons compared to the previous week.

As of October 11th, according to Anec Brazil's latest estimate, Brazil's corn exports are expected to reach 5.6826 million tons in October, down from 8.10 million tons in the same month last year, a year-on-year decrease of 2.3384 million tons.

As of this week, Brazil's cumulative export of corn from January to September 2024 was 23.492 million tons, a decrease of 10.592 million tons or 31.07% compared to 34.084 million tons exported from January to September last year.

Import cost: Brazil has a slight advantage in corn imports

As of October 11th, the arrival cost of Brazilian corn imported within China's quota in November for the second half of the year is around 2066 yuan/ton, and the arrival cost of Meiwan corn in November is around 2081 yuan/ton; The arrival cost of the November shipment of corn from the western United States is around 2097 yuan/ton; The transaction price of bulk grain at Shekou Port is 2330 yuan/ton, with a slight advantage in the import of Brazilian corn in the distant months.

Domestic supply and demand situation

Weather: Good autumn harvest weather

As of the week of October 11th, temperatures in most parts of the country were close to or 1-4 ℃ higher than the same period of the year, with the eastern parts of the northwest and southwest regions being 4-6 ℃ higher; The precipitation in the eastern and northern parts of Northeast China, the central and western parts of Inner Mongolia, and most of North China ranges from 10 to 50 millimeters, while the rest of the agricultural areas in China receive less than 10 millimeters of precipitation or no precipitation at all. The weather in most agricultural areas of North China and the Huang Huai region is sunny, which is conducive to the maturation of corn milk and the harvesting and drying of mature crops.

It is expected that in the next 10 days, except for the southwestern and southeastern coastal areas, most parts of China will have less precipitation and temperatures close to or 1-3 ℃ higher than usual. Most parts of the north will have sunny weather, which is conducive to promoting the autumn harvest and planting process.

Port inventory: North Port inventory increased month on month

As of the week of October 11th, the total corn inventory in the four northern ports was 1.215 million tons, an increase of 55000 tons compared to the previous week.

Last week, the price of corn at the port fluctuated, and new grains from the production area were gradually launched. After the National Day holiday, the morning arrival volume at the port continued to increase, but most of them were contract grains, and the demand for port loading was still acceptable.

Port inventory: Guangdong Port corn inventory has decreased month on month

As of the week of October 11th, the total inventory of corn in Guangdong Port's domestic and foreign trade was 212000 tons, a decrease of 107000 tons from the previous week's 319000 tons. Among them, the domestic corn inventory in Guangdong Port totaled 181000 tons, a decrease of 97000 tons from last week; The foreign trade inventory was 31000 tons, a decrease of 10000 tons from last week.

Feed demand: breeding profits continue to decline

As of the week of October 11th, the average price of live pigs sold nationwide was 17.64 yuan/kg, which was stable compared to last week, unchanged from the previous week, and increased by 14.10% year-on-year. In terms of breeding profits, the profit from self breeding and self raising was 305.91 yuan/head, and the profit from purchasing piglets was 47.27 yuan/head, indicating a continued decline in breeding profits.

Last week, pig prices fluctuated upwards. On the supply side, the price of live pigs has rebounded, while the price of fattened pigs has risen. Farmers are increasing the weight of their pens, and large-scale farms are mainly controlling the operation of releasing pigs from pens. The source of pigs for secondary fattening and supplementary pens is mostly standard pigs, and the proportion of small weight pigs being sold continues to decrease slightly; On the demand side, downstream demand weakened after the holiday, causing slow delivery of goods by slaughter enterprises and manufacturers, resulting in a decrease in production. The demand for frozen products in the market is weak, and downstream traders have low enthusiasm for purchasing goods. It is expected that the market will experience a dual increase in supply and demand this week, with a narrow range of fluctuations overall.

Feed demand: Profit situation of poultry farming

As of the week of October 11th, the weekly breeding profit of free range chickens was -2.37 yuan per chicken, up from -3.15 yuan per chicken last week, an increase of 0.78 yuan per chicken compared to last week. The weekly breeding profit of parent raised chickens was 1.5 yuan per chicken, up from 0.73 yuan per chicken last week, an increase of 0.77 yuan per chicken compared to last week. The weekly breeding profit of laying hens was 51.86 yuan/egg, a decrease of 4.51 yuan/egg from last week.

Last week, profits from broiler farming slightly rebounded. The reason is that on the one hand, the price of chickens has slightly increased, and on the other hand, although the breeding cost remains high, Liaoning, as a representative, has begun to see a 50 yuan/ton reduction in finished materials. The overall breeding cost has dropped from 3.66 yuan/jin last week to 3.64 yuan/jin. In terms of laying hens, feed prices fell last week, and the cost of raising laying hens decreased month on month. The egg market saw a slight increase and then weakened during the week. At the beginning of the week, supermarkets, schools, institutions, and others experienced a phase of replenishment, supporting a slight rebound in prices. Subsequently, demand in many regions continued to weaken, and egg prices fell weakly. Due to the month on month decline in the average price of eggs last week, the profits from egg farming have also decreased.

Feed enterprise inventory: inventory days decrease month on month

As of the week of October 11th, the average inventory of corn in sample feed enterprises was 26.07 days, a decrease of 1.88 days from last week, a month on month decrease of 6.73%, and a year-on-year increase of 0.12%.

Industrial demand: Profit situation of corn starch processing enterprises

As of the week of October 11th, the profit from deep processing of corn starch in Jilin was -34 yuan/ton, a decrease of 50 yuan/ton from last week. The profit from deep processing of corn starch in Shandong was 173 yuan/ton, an increase of 7 yuan/ton from last week; The profit from deep processing of corn starch in Heilongjiang is 105 yuan/ton, an increase of 14 yuan/ton from last week. The profit from deep processing of corn starch in Hebei was 160 yuan/ton, a decrease of 20 yuan/ton from last week.

Overall, processing profits in major production areas across the country have improved. Last week, new grains were successively launched in the Northeast region, and the reduction in raw material costs led to an increase in profits from corn starch.

Industrial demand: The operating rate of deep processing enterprises has increased month on month

As of the week of October 11th, the starch start-up rate of 66 enterprises was 61.71%, an increase of 1.88% compared to last week.

During the new season of corn market, the supply of raw materials is loose, and the corn starch industry continues to rise seasonally.

Industrial demand: Consumption of deep processing enterprises increases month on month

As of the week of October 11th, 126 major corn deep processing enterprises in China have consumed a total of 1.2277 million tons of corn, an increase of 26000 tons compared to the previous week. Among them, corn starch processing enterprises consumed 637600 tons of corn, an increase of 14000 tons compared to last week; Amino acid enterprises consumed 205200 tons, unchanged from last week; Alcohol companies consumed 384900 tons, an increase of 12000 tons compared to last week.

Industrial demand: Corn inventory of deep processing enterprises increases month on month

As of the week of October 11th, the total inventory of corn in 96 deep processing enterprises was 2.714 million tons, an increase of 0.07% compared to last week.

Last week, the inventory levels of deep processing enterprises showed a slight increase compared to the previous month, with significant regional differences. The new grain in Northeast China has also been harvested and listed one after another, and most deep processing enterprises have started to purchase trendy grain, resulting in a recovery in inventory levels. Most of the corn harvest in North China has been completed, reducing supply pressure. Due to a significant ｄｒｏｐ in prices in the early stages, farmers are reluctant to sell, resulting in a slight increase in deep processing inventory in Shandong and Hebei, and a decrease in deep processing inventory in Henan. Overall, during the new grain market season, downstream companies tend to adopt low inventory strategies.

Industrial demand: Downstream deep processing morning to vehicle volume increases month on month

As of the week of October 11th, Shandong's deep processing has accumulated 3136 vehicles, an increase of 259 vehicles or 9.0% compared to last week's 2877 vehicles.

Last week, the number of vehicles in front of the deep processing doors increased compared to the previous week, due to the successive launch of new grain and the joint supply of new and old grain to the market, resulting in an increase in volume. Focus on the profit changes and vehicle delivery volume of deep processing enterprises in the future.

Starch demand: price situation of corn starch and by-products

As of the week ending October 11th, the price of corn starch was 2903 yuan/ton, an increase of 13 yuan/ton compared to the previous week; The price of corn germ meal is 1430 yuan/ton, an increase of 50 yuan/ton compared to the previous period; The price of corn protein powder is 3810 yuan/ton, a decrease of 30 yuan/ton compared to the previous period; The price of corn bran is 630 yuan/ton, up 40 yuan/ton month on month.

Last week, the price of corn by-products continued to show weak performance compared to before the holiday, and the market transaction atmosphere was average. Some deep processing enterprises are gradually experiencing inventory pressure after the holiday, coupled with a decline in soybean meal prices during the week. The main reason for attracting transactions is through price reductions. Downstream customers, except for first-time buyers, lack confidence in the future market, resulting in weak demand performance.

Starch demand: downstream operating rate of corn starch

As of the week of October 11th, the operating rate of F55 fructose corn syrup was 22.49%, a decrease of 24.24% compared to last week. Overall, the inventory of enterprises was high, and coupled with the National Day holiday, there were many enterprises that were shut down, resulting in a significant decline in operating rates; The operating rate of malt syrup was 35.64%, a decrease of 14.58% compared to last week. During the National Day holiday, some companies stopped production and restricted production, resulting in a significant decline in operating rates; The operating rate of corrugated paper was 57.6%, an increase of 0.26% compared to last week; The operating rate of cardboard was 63.99%, an increase of 1.69% compared to last week.

Basis situation: corn spot price and basis trend

As of October 11th, the average spot price of corn was reported at 2170 yuan/ton, and the basis price of corn was reported at -43 yuan/ton.

In terms of basis, the corn basis fluctuated downward last week. The spot price of corn has experienced a significant decline; On the market side, the main corn contract fluctuated and stabilized, resulting in a downward trend in the basis. It is expected that the market will continue to maintain a volatile adjustment trend this week, and the basis may continue to fluctuate weakly.

Price difference situation: Corn price difference situation

As of the week of October 11th, the price difference structure of corn futures is 2411 at a discount of 25012501 at a discount of 2505.

Recently, due to the continuous price reduction on the spot side and the gradual listing of new grains, there has been a temporary oversupply of corn supply, which has suppressed the prices in recent months. Therefore, 2411 is discounted by 2501; With the introduction of policies such as the national plan to produce 100 billion kilograms of grain, the overall corn production is expected to decrease by a limited amount. In addition, January is the peak period for traditional grain sales, and prices are under pressure to decline. Therefore, 2501 is discounted by 2505. It is expected that the price difference between November and January will continue to fluctuate in the absence of favorable weather conditions, while the price difference between January and May may still encounter obstacles and decline near the previous high level.

Alternative situation: The price difference between jade and wheat has slightly widened

As of October 11th, the average market price of wheat was 2454 yuan/ton, the average market price of corn was 2170 yuan/ton, and the price difference between wheat and corn was 284 yuan/ton, an increase of 18 yuan/ton compared to last week. The price difference between jade and wheat was greater than 200 yuan/ton, and wheat had little advantage in replacing corn.

Last week, wheat prices were adjusted strongly, and the market was active in purchasing and selling. Grain merchants are holding their grain and observing, their enthusiasm for selling grain has slowed down, and the supply of grain sources in the market is gradually tightening. After the National Day holiday, flour enterprises continued to operate at a low level, with limited wheat consumption. However, the inventory level of enterprises was low, and after a decrease in production, they raised prices slightly to promote sales. Under the game of supply and demand, wheat prices continue to rise.

Customs data shows that China's wheat imports in August were 400000 tons, a year-on-year decrease of about 50.9%; The total import volume of wheat from January to August was 10.38 million tons, an increase of about 9.5% year-on-year.