Corn: Waiting for new drivers

Core viewpoint: Neutral. On November 9th, the USDA expects Ukraine's new corn production to be 26.2 million tons, unchanged from the previous month, and exports to be 2300 tons, unchanged from the previous month. Last week, the temperature anomaly in the main corn producing areas of Brazil was relatively high, with little change in precipitation in the central region compared to previous years, and more 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 was 42.1%, which was faster than the previous year. The crop progress report released by the US Department of Agriculture shows that as of November 8th, the progress of corn harvest in the United States is 91%, up from 81% last week and 78% in the same period last year.

Last week, the performance of corn prices varied among different markets, with prices rising in the Northeast and sales regions, while corn prices in North China first rose and then fell. The Northeast region experienced cloudy and rainy weather this week, with some corn experiencing an increase in moisture content. Under the support of trading costs, shipping prices were slightly raised. The price of corn in North China has maintained a trend of first rising and then falling, with relatively light grassroots purchases and sales, mainly consisting of trendy grain purchases and sales, and there is basically no dry grain purchased at grain points. The amount of goods received by deep processing enterprises in front of their doors remains at a high level, but the enterprises mainly purchase wet grain and cannot do long-term storage. They purchase more according to demand. The market maintains a dynamic balance of purchases and sales, with limited fluctuations in prices. The overall price of corn in the sales area has gradually stabilized after an overall increase. The quotation of southern ports follows the price changes of northern ports and futures markets, and there is a significant increase in prices from the weekend to the beginning of the week. With the consolidation of the futures market, the quotes from southern ports are temporarily stable.

Last week, pig prices continued to decline, with the decline widening. On the supply side, the Southwest and South China regions have seen a gradual increase in the number of pigs being slaughtered in the early stages; In terms of scale, in order to accelerate the completion of the annual pig production plan, some enterprises have carried out weight reduction and slaughter operations; On the demand side, the demand within the week continued to increase compared to the previous period, but due to high temperatures, coupled with lower prices of white bars and sluggish orders from slaughter enterprises, the increase in enterprise operating rates was relatively small. It is expected that the supply side of the pig market will continue to increase this week, with no significant increase in demand. In terms of deep processing, the profit of corn starch processing has improved, the operating rate of corn starch enterprises has 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, the main corn contract fluctuated weakly last week, hitting a low of 2193 yuan/ton. On the one hand, deep processing has led to a sustained high volume of vehicles and a continuous decline in acquisition prices despite loose supply; On the other hand, there is no new news guidance for macro policies, and the market is in a state of no obvious positive news. A slight weakening of macro sentiment will bring temporary selling pressure to the market. Therefore, overall, the 2501 contract showed a fluctuating and weak trend last week. This week, we need to focus on the acquisition prices of deep processing enterprises and the situation of grassroots volume, pay attention to the release of incremental policies, and pay attention to the progress of grassroots grain sales and weather changes in the future.

Foreign origin situation

USDA: November Corn Supply and Demand Report

On November 9th, the USDA released its November supply-demand balance report, stating that there was little change in the old crop balance sheet of US corn for the year 23/24, with only minor adjustments made within domestic consumption. In terms of new works, the US corn production and ending inventory for 2024/25 will be reduced. The corn production is expected to be 386 million tons, a decrease of 1.54 million tons from last month, as the yield per acre decreased by 0.7 catties to 183.1 catties. The corn harvest area remains unchanged at 33.47 million hectares. The total amount of corn used remains unchanged at 321 million tons. Due to a decrease in supply and no change in usage, the final inventory of corn has been reduced to 49.23 million tons.

The overall report is favorable for the new production, as the decrease in yield per unit area has led to a reduction in production expectations. In addition, exports remain at the same level of 59.06 million tons and have not been significantly reduced due to a decrease in exports to China. This indicates that the United States can still rely on its export advantage to export a considerable amount of corn to countries other than China, which is beneficial for its domestic price stability.

United States: Corn Export Situation

On the week of November 8th, the net sales of corn exports from the United States for 2024/2025 were 2.766 million tons, an increase of 424000 tons compared to the previous week's 2.342 million tons; The total export volume of US corn is 7.672 million tons, with an outstanding sales volume of 20.914 million tons.

Data source: Zijin Tianfeng Futures Research Institute

US: Situation of US corn exports to China

On the week of November 8th, the United States shipped 918000 tons of 2024/2025 corn exports, compared to 788000 tons the previous week; The United States shipped 0 million tons of corn to China (mainland region) and 0 million tons to China last week, the same month on month, with a cumulative sales volume of 25000 tons to China.

US: Net short positions of US corn fund decrease

As of the week ending November 8th, the long position of US corn was 244300 lots, an increase of 13700 lots compared to the previous week; Short positions of 262000 lots decreased by 40100 lots compared to last week.

As of the week ending November 8th, the net short position was 35000 lots, a decrease of 52000 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 413 cents per bushel, and the highest price was 434.75 cents per bushel.

USDA: Brazilian Corn Supply and Demand Report for November

In November, 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 44 million tons, a decrease of 2 million tons compared to October; The corn production for 2024/25 remains unchanged at 127 million tons, with an estimated export of 48 million tons, slightly reduced by 1 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 November 8th, the temperature anomaly in the main corn producing areas of Brazil remained relatively stable compared to previous years, with more precipitation in the central and southern regions and more 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 southern Brazil.

Brazil: New corn sowing too fast

As of the week of November 8th, the progress of planting corn for the 2024-2025 crop year was 42.1%, slightly faster 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 85.4%, the germination stage accounts for 12.1%, and the flowering part accounts for 2.5%.

Brazil: Weekly corn exports increase month on month

According to Anec Brazil's latest estimate, Brazil's corn exports from October 27th to November 2nd amounted to 1.5239 million tons, compared to 1.4093 million tons last week, an increase of 114600 tons compared to the previous week.

As of October 31st, according to Anec Brazil's latest estimate, Brazil's corn exports are expected to reach 5.9257 million tons in October, a decrease of 2.0952 million tons compared to the same month last year, which was 8.010 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 November 8th, the arrival cost of Brazilian corn imported within China's quota in November for the second half of the year is around 2100 yuan/ton, and the arrival cost of Meiwan corn in November is around 2140 yuan/ton; The arrival cost of the November shipment of corn from the western United States is around 2105 yuan/ton; The transaction price of bulk grain at Shekou Port is 2300 yuan/ton, and there is a slight advantage in importing Brazilian corn in the distant months.

Domestic supply and demand situation

Weather: Pay attention to strong winds and cooling weather

As of the week of November 8th, temperatures in most agricultural areas across the country were higher than usual, with central and western Inner Mongolia, southern Northeast China, most parts of Northwest China, and western North China being 2-4 ℃ higher, and northern Northeast China being 2-4 ℃ lower; There will be light to moderate snow or sleet in the central and eastern parts of Inner Mongolia and the central and northern parts of Northeast China, and moderate to heavy snow or sleet in the northern and western parts of Xinjiang, with a cumulative precipitation of 5-25 millimeters. Last week, there were strong winds and cooling weather in the central and eastern parts of Inner Mongolia, as well as in most parts of Northeast China. There was light to moderate snow or sleet in Northeast Inner Mongolia, Heilongjiang, Jilin, and other areas, which was unfavorable for the drying and storage of autumn harvest crops, facility agriculture, and animal husbandry production.

It is expected that there will be light to moderate snow in northeastern Inner Mongolia, Heilongjiang, eastern Qinghai, western Gansu, and central southern regions on the 11th and 12th of this week, and some areas in northern Xinjiang on the 11th and 14th, with locally heavy to blizzard or blizzard, which is unfavorable for facility agriculture and animal husbandry production.

Port inventory: North Port inventory increased month on month

As of the week of November 8th, the total corn inventory in the four northern ports was 2.465 million tons, an increase of 556000 tons compared to the previous week.

Last morning, the arrival volume at the port increased significantly, with grain sources mainly from Liaoning and Heilongjiang, and Jilin grain also beginning to supply the port. At present, the demand for loading ships at the port is still strong, and traders have a high enthusiasm for purchasing, but they mostly execute contract orders.

Port inventory: Guangdong Port corn inventory increased month on month

As of the week of November 8th, the total inventory of corn in Guangdong Port's domestic and foreign trade was 326000 tons, an increase of 36000 tons compared to the previous week's 290000 tons. Among them, the domestic corn inventory in Guangdong Port totaled 249000 tons, an increase of 46000 tons from last week; The foreign trade inventory was 77000 tons, a decrease of 10000 tons from last week.

Feed demand: breeding profits continue to decline

As of the week of November 8th, the average price of live pigs sold nationwide was 17.35 yuan/kg, a decrease of 0.06 yuan/kg from last week, a month on month decrease of 0.34%, and a year-on-year increase of 19.74%. In terms of breeding profits, the profit from self breeding and self raising was 263.75 yuan/head, while the profit from purchasing piglets was -54.15 yuan/head, indicating a continued decline in breeding profits.

Last week, pig prices continued to decline, with the decline widening. On the supply side, the Southwest and South China regions have seen a gradual increase in the number of pigs being slaughtered in the early stages; In terms of scale, in order to accelerate the completion of the annual pig production plan, some enterprises have carried out weight reduction and slaughter operations; On the demand side, the demand within the week continued to increase compared to the previous period, but due to high temperatures, coupled with lower prices of white bars and sluggish orders from slaughter enterprises, the increase in enterprise operating rates was relatively small. It is expected that the supply side of the pig market will continue to increase this week, with no significant increase in demand.

Feed demand: Profit situation of poultry farming

As of the week ending November 8th, the weekly breeding profit for free range chickens was -1.15 yuan per chicken, compared to -1.94 yuan per chicken last week, an increase of 0.79 yuan per chicken from the previous week. The weekly breeding profit of parent raised chickens was 1.47 yuan per chicken, compared to 1.42 yuan per chicken last week, an increase of 0.05 yuan per chicken from last week. The weekly breeding profit of laying hens was 59.89 yuan/egg, a decrease of 5.35 yuan/egg from last week.

Last week, broiler farming still made a slight profit. The main reason is due to the average cost of chicken seedlings being 3.71 yuan/feather during the week, stable feed prices in Northeast China, and an overall average breeding cost of 3.71 yuan/jin. The average price of live chickens has remained at 3.76 yuan/jin, and there is still profit in the breeding sector. In terms of laying hens, the egg market continued to decline during the week, with weak terminal demand and low purchasing sentiment among downstream traders. The inventory pressure in various links increased significantly, and egg prices were under pressure and weakened. Due to the decrease in egg prices and the increase in feed prices last week, the profit of egg chicken farming has decreased compared to the previous month.

Feed enterprise inventory: inventory days increase month on month

As of the week of November 8th, the average inventory of corn in sample feed enterprises was 28.56 days, an increase of 0.62 days from last week, a month on month increase of 2.23%, and a year-on-year decrease of 2.85%.

Industrial demand: Profit situation of corn starch processing enterprises

As of the week of November 8th, the profit from deep processing of corn starch in Jilin was 43 yuan/ton, an increase of 24 yuan/ton from last week, while the profit from deep processing of corn starch in Shandong was 125 yuan/ton, an increase of 16 yuan/ton from last week; The profit from deep processing of corn starch in Heilongjiang is 95 yuan/ton, an increase of 3 yuan/ton from last week. The profit from deep processing of corn starch in Hebei was 199 yuan/ton, an increase of 17 yuan/ton from last week.

Overall, the processing profits of major production areas in China are within the profit range. With the successive launch of new grains, the reduction in raw material costs has driven the improvement of corn starch profits.

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

As of the week of November 8th, the starch start-up rate of 66 enterprises was 67.91%, an increase of 3.09% compared to the previous week.

With the abundant supply of raw material corn and the continuous promotion of profits in the corn starch industry, the start-up of the corn starch industry has significantly increased compared to the previous period.

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

As of the week of November 8th, 126 major corn deep processing enterprises in China have consumed a total of 1.2644 million tons of corn, an increase of 25400 tons compared to the previous week. Among them, corn starch processing enterprises consumed 684000 tons of corn, an increase of 21800 tons compared to last week; Amino acid enterprises consumed 213100 tons, unchanged from last week; Alcohol companies consumed 367300 tons, an increase of 3600 tons compared to last week.

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

As of the week of November 8th, the corn inventory of 96 deep processing enterprises was 3.346 million tons, a decrease of 1.88% from last week's price.

Last week, the inventory level of corn deep processing enterprises was narrowly reduced. Looking at different regions, the grain sales of farms in the Northeast production area have basically been completed, and there has been a significant increase in grain shipments to ports recently. The amount of goods received through deep processing has decreased, and the overall supply is lower than consumption, resulting in a narrow reduction in inventory. The overall inventory level in the North China production area has decreased, mainly due to the current focus on purchasing and selling trendy grains. Enterprises are unable to maintain long-term inventory and often adopt a strategy of using and harvesting as needed. Overall, the inventory level of deep processing has been narrowly reduced.

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

As of the week of November 8th, the total number of vehicles processed by Shandong's deep processing industry reached 6070, a decrease of 447 vehicles or 6.8% compared to the previous week's 6517 vehicles.

Last week, the number of vehicles in front of the deep processing doors decreased compared to the previous week. The reason is that deep processing enterprises continued to decline in purchase prices due to an increase in the number of vehicles arriving last week, and the shipping pace of traders slowed down. In addition, in some areas, logistics transportation was affected due to weather and other factors, resulting in a decrease in the number of vehicles arriving. 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 of November 8th, the price of corn starch was 2910 yuan/ton, a decrease of 13 yuan/ton compared to the previous week; The price of corn germ meal is 1430 yuan/ton, up 10 yuan/ton month on month; The price of corn protein powder is 3930 yuan/ton, an increase of 240 yuan/ton compared to the previous period; The price of corn bran is 700 yuan/ton, up 70 yuan/ton month on month.

Last week, the prices of corn by-products continued to rise, and companies actively supported prices. On the one hand, macroeconomic policies have driven market sentiment, with a significant increase in soybean meal prices and a continuous increase in spot transactions in the market, which has driven deep processing enterprises to actively raise prices. On the other hand, deep processing enterprises have had orders in the early stage, and overall inventory pressure is not high. The market has released positive news, supporting the strong performance of prices.

Starch demand: downstream operating rate of corn starch

As of the week of November 8th, the operating rate of F55 fruit glucose syrup was 42.26%, a decrease of 0.26 percentage points from last week. Overall, the operating rate of fruit glucose syrup has been fluctuating at a low level recently, and there have been many market shutdowns for maintenance; The operating rate of maltose syrup was 54.35%, a decrease of 0.36 percentage points compared to last week. Downstream procurement was average, and the company's sales were not smooth, resulting in fluctuating operating rates at a low level; The operating rate of corrugated paper was 63.48%, an increase of 1.46% compared to last week; The operating rate of cardboard was 67.71%, an increase of 0.46% compared to last week.

Basis situation: corn spot price and basis trend

As of November 8th, the average spot price of corn was reported at 2177 yuan/ton, and the basis price of corn was reported at -35 yuan/ton.

In terms of basis, the corn basis fluctuated last week. The spot price of corn is mainly stable with little fluctuation; On the market side, the main corn contract fluctuated and experienced a significant decline on Friday, with a weekly ｄｒｏｐ of 1.83%, resulting in a fluctuating basis. It is expected that the market will continue to maintain a volatile trend this week, and the basis may continue to fluctuate weakly.

Price difference situation: Corn price difference situation

As of the week of November 8th, the price difference structure of corn futures is 2501 with a discount of 2505.

Due to the traditional peak period of grain sales before the Spring Festival, there will be a temporary oversupply of corn supply, which will suppress prices in recent months and lead to a decrease in price pressure. In May, the supply of new crops will decrease temporarily, and the supply pressure will relatively ease. Therefore, 2501 will be discounted by 2505. It is expected that the gap between January and May will approach the previous high level or continue to encounter obstacles and decline.

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

As of November 8th, the average price of wheat market is 2464 yuan/ton, and the average price of corn market is 2174 yuan/ton. The price difference between wheat and corn is 288 yuan/ton, an increase of 4 yuan/ton compared to last week. The price difference between jade and wheat is greater than 250 yuan/ton, and there is basically no advantage for wheat to ｒｅｐｌａｃｅ corn.

Last week, wheat prices were mainly adjusted weakly, and companies flexibly adjusted their purchasing prices based on their own inventory and stocking volume. The enthusiasm of grain holders to sell grain has increased, and grain merchants with profit margins are actively selling grain, resulting in an increase in the circulation of grain sources in the market; Grain merchants with high inventory costs continue to hold onto their grain and wait and see. The profit margin of fan enterprises is meager, and they continue to adopt the purchase and sales strategy of low inventory and fixed procurement based on sales. Supported by the policy of continuous purchases by China Grain Reserves Corporation in various regions, the short-term decline in wheat prices is limited.

According to customs data, China's wheat imports in September were 230000 tons, a year-on-year decrease of about 60%; The total import volume of wheat from January to September was 10.61 million tons, an increase of about 5% year-on-year.