New corn market-based pricing trend becomes clear, industry views analyzed

Recent market expectations suggest that after this year's newly harvested corn comes to market, the temporary storage corn purchase policy may be discontinued; even if it is not discontinued, it is estimated that the temporary storage purchase price will be lowered, which will weaken the policy support factor for corn prices. Zhang Zhixian, Vice President of the Yida Research Institute of China Grain Network, believes that regardless of whether the temporary storage corn purchase policy is implemented in Northeast China's corn-producing areas this year, the trend toward market-based pricing in the price formation of the new-season corn is already clear. Under normal conditions, the domestic corn price operating range in the new year will fall to a new lower platform.

Changes in the corn purchase policy will cause grain-holding entities at all levels to accelerate the pace of corn sales in the third quarter. On the one hand, the speed at which traders sell corn may accelerate; this situation has already begun since the second quarter and will continue in the third quarter. On the other hand, rotation grain sources in reserves at all levels will also accelerate their rotation-out efforts. In view of the changes in the temporary storage policy and the sluggish consumption of downstream products, processing enterprises will continue to maintain low inventory levels in the third quarter, and it is even possible that some enterprises will reduce their operating levels at the end of the third quarter and wait for new grain to come to market.