Imported coarse grains replace corn, 2015 increase expected to reach 108%

In 2014, China's total imports of sorghum, barley and DDGS (dried distillers grains with solubles) amounted to 16.6 million tons, and the total imports of these products in 2015 are expected to reach 30 million tons, an increase of 81%. Excluding the portion of barley used for brewing, after conversion, the above imported products in 2015 are expected to replace 22.66 million tons of feed corn, a year-on-year increase of 11.78 million tons, or 108%.

The quantity of coarse grains replacing corn continues to grow

Customs data show that in October China imported 42,900 tons of corn, down 74.73% month-on-month and down 62.45% year-on-year. At present, the 2015 corn quota is basically used up, and only scattered corn arrivals remain in the later period. It is expected that the full-year corn imports in 2015 will be 4.6 million tons, a year-on-year increase of 77%. Since imported coarse grains are not subject to quota restrictions, the volume of imported coarse grains in October was still relatively large.

In October China imported 681,900 tons of sorghum, compared with 1,076,700 tons last month and 678,800 tons in the same period last year. In the next two months, more than 2 million tons of sorghum will still arrive at ports. It is expected that the total sorghum imports in 2015 will be 11 million tons, a year-on-year increase of 90%.

In October China imported 660,200 tons of DDGS (dried distillers grains with solubles), compared with 933,500 tons last month and 117,800 tons in the same period last year. In the next two months, about 1.1 million tons of DDGS (dried distillers grains with solubles) will still arrive at ports. It is expected that the full-year import volume will be 7 million tons, a year-on-year increase of 29%.

In October China imported 998,400 tons of barley, and in November imported 1,295,300 tons of barley. It is expected that the full-year barley imports in 2015 will be 12 million tons, a year-on-year increase of 122%, of which feed barley is estimated at 9 million tons, a year-on-year increase of 270%.

North China corn is expected to edge down later

On November 25, the factory-gate price of standard-moisture corn for deep-processing enterprises in Weifang, Shandong was 1,980 yuan to 2,040 yuan per ton, with mixed rises and falls; in Xingtai, Hebei it was 1,840 yuan to 1,900 yuan per ton, up 40 yuan to 60 yuan per ton from November 17 to 22; in Hebi, Henan it was 1,840 yuan to 1,880 yuan per ton, up 20 yuan per ton.

Affected by rainy and snowy weather, grain-using enterprises flexibly adjusted corn purchase prices according to arrival volumes.

Monitoring by the China National Grain and Oils Information Center shows that as of November 25, the grain-selling progress of farmers in Shandong was 31%, 1 percentage point faster than the same period last year; in Henan the grain-selling progress was 30%, 1 percentage point faster than the same period last year; in Hebei the grain-selling progress was 18%, 3 percentage points slower than the same period last year. The overall grain-selling progress in North China reached 27%, basically flat with last year. In the earlier period, North China corn prices were low, especially in Shandong and Henan, where outbound shipments and domestic sales moved quickly.

In the past month, affected by rainy and snowy weather, the grain-selling progress slowed. As the weather clears at the end of November and the beginning of December, farmers will speed up grain selling. At that time, large volumes of corn will come onto the market, which will put some pressure on prices. In addition, since November, North China corn prices have risen, and the price advantage over Northeast corn in sales areas has weakened, which will reduce the later outbound demand for North China corn.

Downstream demand for corn has not improved significantly. Under the influence of multiple bearish factors, the risk of a price decline in North China corn later is relatively large. On the other hand, grain-using enterprises in North China are generally in a low-inventory state, and after the weather improves they will have a strong need to replenish stocks, which in turn provides some support for corn prices. On the whole, North China corn prices are expected to edge down later.

Northeast corn is expected to remain stable with slight gains later

On November 25, the corn purchase price of deep-processing enterprises in Zhaodong, Heilongjiang was 1,730 yuan to 1,790 yuan per ton, up 20 yuan to 60 yuan per ton from last week; in Tongliao, Inner Mongolia it was 1,840 yuan to 1,900 yuan per ton, up 20 yuan to 40 yuan per ton.

In Changchun, Jilin it was 1,880 yuan to 1,920 yuan per ton, and in Kaiyuan, Liaoning it was 1,930 yuan to 1,950 yuan per ton, both up 40 yuan per ton. Temporary reserve purchases and weather supported Northeast corn prices.

Monitoring by the China National Grain and Oils Information Center shows that as of November 25, the grain-selling progress of farmers in Heilongjiang was 20%, 5 percentage points slower than the same period last year; in Jilin it was 13%, 3 percentage points slower than the same period last year; in Inner Mongolia it was 16%, 3 percentage points slower than the same period last year; in Liaoning it was 24%, 5 percentage points slower than the same period last year. Considering the huge supply pressure in the corn market, the rise in Northeast corn prices later will be limited, and the temporary reserve price is very likely to be the top price.

Reduced arrivals boost prices at northern and southern ports

On November 26, at Bayuquan Port in Liaoning, the mainstream purchase price of Liaoning corn with moisture within 15%, test weight above 700 grams per liter and moldy kernel rate within 3% was 2,010 yuan to 2,030 yuan per ton, and the theoretical平舱 price was 2,050 yuan to 2,080 yuan per ton, both up 30 yuan per ton from last week; at Jinzhou Port, the mainstream purchase price of Liaoning corn was 2,020 yuan to 2,030 yuan per ton, and the theoretical平舱 price was 2,060 yuan to 2,080 yuan per ton, both up 30 yuan to 40 yuan per ton. Snowfall in producing areas affected corn arrivals at northern ports, the corn price spread between ports and producing areas was relatively small, and traders' profits were thin, all of which led to a reduction in corn arrivals at northern ports. Under these circumstances, traders had to raise prices to purchase corn.

At Shenzhen Port in Guangdong, the transaction price of high-quality corn from Liaoning and Jilin with 14.5% moisture was 2,150 yuan to 2,170 yuan per ton, up 20 yuan per ton from last week; Hebei corn was 2,080 yuan to 2,100 yuan per ton, up 40 yuan to 60 yuan per ton. The price spread between Northeast corn and North China corn at Guangdong ports was 70 yuan per ton, 20 yuan to 40 yuan per ton narrower than last week and 150 yuan to 170 yuan per ton narrower than in early November.

The price advantage of Northeast corn is gradually recovering, which will increase the market share of Northeast corn in southern sales areas in the future. At present, inventory at Guangdong ports is at a low level. As of November 25, port corn inventory was only 148,000 tons, down 58,000 tons from last week. With reduced port arrivals and a recovery in feed enterprises' willingness to restock, traders raised corn quotations.