Corn inventories continue to be drawn down, and the choppy market will persist
In terms of quotes from major regions, as of June 19, prices in Dalian, Jinzhou, Changchun, Weifang and Shekou stood at 2,410 yuan/tonne, 2,400 yuan/tonne, 2,380 yuan/tonne, 2,400 yuan/tonne and 2,480 yuan/tonne respectively, with changes from the previous week of 0 yuan/tonne, 0 yuan/tonne, 0 yuan/tonne, +10 yuan/tonne and -10 yuan/tonne, and changes from the previous month of -30 yuan/tonne, -40 yuan/tonne, +20 yuan/tonne, -10 yuan/tonne and -60 yuan/tonne respectively.
With prices inverted between northern and southern ports, purchasing in the north has been quiet, arrivals have stayed persistently low, and mainstream purchase prices are 2,300-2,360 yuan/tonne; southern ports have faced obvious inventory pressure recently, and coupled with the concentrated arrival of imported corn, inventories have climbed to around 450,000 tonnes. Corn shipments have stayed persistently low under the impact of weak demand and imported substitutes, with daily shipments of less than 15,000 tonnes. In the short term, inventory pressure at southern ports will remain, and the weak market will continue to weigh on the market and will be transmitted to northern ports.
Spot starch prices have risen and fallen unevenly. As of June 19, prices in Changchun, Shijiazhuang, Weifang, Xi'an, Shanghai, Fuzhou and Guangzhou stood at 3,000 yuan/tonne, 3,100 yuan/tonne, 3,080 yuan/tonne, 3,050 yuan/tonne, 3,260 yuan/tonne, 3,300 yuan/tonne and 3,250 yuan/tonne respectively. Compared with the previous week, prices changed by +100 yuan/tonne, +120 yuan/tonne, +80 yuan/tonne, +30 yuan/tonne, +80 yuan/tonne, +60 yuan/tonne and +90 yuan/tonne respectively. Compared with the previous month, changes were +50 yuan/tonne, +70 yuan/tonne, +30 yuan/tonne, -50 yuan/tonne, -60 yuan/tonne, -10 yuan/tonne and -30 yuan/tonne. Corn starch is running at high levels, but downstream demand is weak, downstream markets are fairly cautious and wait-and-see, and starch prices are expected to come under pressure.
A report released by the Ministry of Agriculture shows that in April the hog inventory was 387 million head, down 9.40% year on year, and the breeding sow inventory was 39.71 million head, down 14.90% year on year. The hog inventory data has fallen sharply, while domestic soybean meal (2578, -21.00, -0.81%) supply is not a problem, making the supply-demand contradiction more prominent. According to data from the Chinese government website, as of June 10, the hog price was 14.81 yuan/kg, up 0.16 yuan/kg from the previous week, and the hog-to-grain ratio was 6.07, up 0.07 from the previous week. The continued decline in hog inventory has already spurred a recovery in pork prices, and hog profits will continue to improve later.
Although corn starch processing profits are still falling from next week, in Shandong they have now dropped to -119 yuan/tonne. The main reason is a clear increase in enterprise operating rates. At present, the corn starch market is fluctuating upward within a stable range, with movements of 10-40 yuan/tonne, and price adjustments in Shandong are fairly active and obvious. Downstream demand is weak, while prices of by-products such as protein powder and fibre continue to slide, gradually increasing the operating pressure on starch producers, and in some regions producers have begun to cut processing volumes to ease their own pressure.
The earlier wave of rumours and speculation has basically come to an end, spot prices remain in a weak range, and futures will still be in a choppy market in the short term. Demand in southern sales areas remains persistently weak, and arrival pressure at southern ports is increasing, while imported substitutes continue to suppress corn demand, and the weak market may be transmitted to northern ports. Although market grain sources are in a period of continued drawdown, the drawdown is slow, the supply-demand gap has yet to arrive, and prices will continue to face pressure in the short term. But judging from the inventory drawdown stage in which the corn market currently finds itself, corn prices will find it hard to fall further in the future.