Several Issues on the Rhythm of Corn Trading

The decrease in domestic corn production will significantly reduce the substitution of wheat and brown rice, and the price of brown rice is relatively high. Imported grains are starting to tighten, and demand for deep processing and aquaculture is still increasing. It is expected that corn supply will be tight in the year 24/25, and corn spot prices may fluctuate narrowly before the year and rise after the year, but the price of wheat will constrain the rebound height of corn.

It is expected that the downward space for corn below 1900 in Suihua, Heilongjiang is limited, and it may reach around 2150 in May and June. North China corn 2050 is at the bottom, with a pressure of 2400 yuan above. 01 Corn is generally between 2150-2250, and 05 Corn is generally between 2200-2350.

Part One Analysis of Domestic Corn Supply and Demand

The domestic corn production has decreased. In the new season of 2024, corn production will decrease. According to data from Steel Union, the national corn production will decrease by 8.73 million tons, with a reduction of 6 million tons in Northeast China and 5.5 million tons in North China. This is similar to our research. With the rise of accumulated temperature in Northeast China in the later stage, the reduction in corn production this year is lower than expected, but Xinjiang and other regions have increased production by about 1.5 million tons.

Domestic substitution is decreasing. In 2024/25, the price difference between wheat and corn in North China has widened, and the storage price of wheat is relatively high. Currently, the price difference between wheat and corn in North China is at a high level. As of October 24th, the price difference between wheat and corn in North China is around 300 yuan/ton. The amount of wheat flowing into feed enterprises will be significantly lower than in 2023. Due to the low price of corn in 2024, aged rice has not been auctioned off. It is expected that aged rice will be auctioned off in 2025, but the price will not have an advantage compared to corn. The minimum auction price for aged rice in 2023 is 1700 yuan/ton, which is relatively high. If ranked in 2025, even if calculated at a base price of 1400 yuan/ton, the converted cost to port will still be 2230 yuan. It is expected that the replacement of rice and wheat in the new season will significantly reduce by more than 20 million tons compared to last year.

The substitution of imported grains has also begun to decrease. Due to the low price of corn in China, the import of grains has begun to tighten. From January to September 2024, imports of corn, sorghum, barley, and DDGS amounted to 31.63 million tons, an increase of 4 million tons compared to the same period last year. But it is expected that imports will significantly decrease in the fourth quarter, and imports will still decrease in the first quarter of next year.

There is an increase in demand. Due to the increasing production capacity of deep processing and the good profits of starch enterprises, it is expected that the consumption of deep processed corn will increase by 1-2 million tons. The profit of pig farming is also good, and it is expected that the pig inventory will continue to increase, resulting in an increase of 2-4 million tons in feed demand.

The storage policy is favorable, but there is still significant uncertainty in this year's storage policy. There have been many rumors in the market recently, and the amount of storage has not yet been determined. Due to the impact of storage and purchase news, there may be a significant price difference between the market and spot goods at certain stages.

The storage policy is favorable, but there is still significant uncertainty in this year's storage policy. There have been many rumors in the market recently, and the amount of storage has not yet been determined. Due to the impact of storage and purchase news, there may be a significant price difference between the market and spot goods at certain stages.

Domestic supply is starting to tighten, and demand is still slowly increasing. It is expected that the supply and demand of corn in the new season will remain tight. It is expected that the downward space for corn below 1900 in Suihua, Heilongjiang is limited, and it may reach around 2150 in May and June. North China corn 2050 is at the bottom, with a pressure of 2400 yuan above. 01 Corn is generally between 2150-2250, and 05 Corn is generally between 2200-2350.

Part 2 Domestic Corn Trading Logic

We divide the domestic corn trading logic into two time periods before and after the Spring Festival based on the seasonal pattern of supply and the reduction of substitution.

The first stage (before the Spring Festival): Considering that there is still a large amount of aged grain in the Northeast region this year, and that traders and downstream deep processing enterprises in the Northeast region have a weak willingness to stockpile, the price of corn in the Northeast region may maintain a bottom oscillation. However, due to the continued losses of tenants this year, the policy of collecting and storing land will be advanced. Last year, due to delayed grain storage, a large amount of grain was collected and stored, resulting in high prices in the Northeast region and significant losses for deep processing and traders. At this stage, it is expected that due to the impact of the storage news, the market will see a rise in spot prices, providing better hedging profits for enterprises and traders. 01 Corn fluctuates between 2150-2250.

The second stage (after the Spring Festival): Due to the significant reduction in production in North China and the significant decrease in substitution in the new season, there will be a shortage of corn in North China from May to June. The price difference between corn from North China and Northeast China will widen, and some corn from Northeast China will flow into North China. However, considering that the new season of wheat will begin to hit the market in June and the price of wheat will exceed 2500 yuan/ton, the National Reserve will sell off its inventory, and it is expected that the top price of corn in North China may be around 2400 yuan/ton. Suihua corn in Heilongjiang may rebound to around 2150 yuan/ton. 05 Corn may rebound to around 2350.