Corn prices in the Hebei-Shandong-Henan region have fallen noticeably
Downstream industries are shrinking, and demand for feed corn shows no sign of recovery
Compared with the usual pattern in previous years, when market prices rose steadily in small increments after entering June, this year's corn market price trend in Henan, Hebei and Shandong has been somewhat abnormal: instead of rising, it has shown a clear downward trend.
“The purchase price at the warehouse is 1.125—1.13 yuan/jin, much lower than in previous years.” Wang Yingzhong, business manager of the Jining No. 1 Grain Depot in Shandong, told the Futures Daily reporter that many corn starch plants and alcohol plants in Shandong are currently operating below capacity, leading to relatively sluggish market demand, and after a small rebound in April—May, corn prices have returned to a downward track.
According to the reporter's understanding, corn starch processing enterprises and several large feed processing enterprises are scattered throughout Shandong, so although the province's corn output is large, it still cannot meet local demand, and in recent years large quantities of corn have still been transferred in from provinces such as Henan and Hebei to fill the supply gap. At present, Shandong has become an emerging major corn sales area in the interior, and is the leader in the rise and fall of corn market prices in the interior.
Chang Aiguo, business manager of the Puyang State Grain Reserve Depot in Henan, said that this year far fewer Shandong traders have come to Henan to purchase corn than in previous years, and poor sales and falling prices of downstream corn products have limited demand growth. According to Chang Aiguo, as of now, farmers' corn inventories in various parts of Henan are higher than in previous years, and in Puyang and other places farmers still have 20% to 30% of their corn unsold.
“When this alcohol plant was doing brisk business, our local corn sold for 2—3 fen per jin more than elsewhere, but now it has been shut down for many days. Making alcohol does not earn money, and on top of that financial institutions basically do not lend to grain-related enterprises and other real-economy businesses, so this alcohol plant had no choice but to close and stop production, which has made buying and selling activity in the local corn market much quieter than in previous years.” Xu Wei, a corn trader in Zhoukou, Henan, told the reporter, pointing to a small local alcohol plant. In recent years, not only has the corn market been sluggish, but the same is true of other agricultural product markets such as wheat, cotton and peanuts, and some small and medium-sized grain traders like him have switched to other businesses.
According to Zhao Jianshe, a corn vendor in Xingtai, Hebei, buying and selling activity in the local corn market is basically at a standstill: farmers refuse to sell because they consider the price too low, and no one in the market is actively buying, making the market like a pool of stagnant water.
The reporter learned from corn markets in various parts of Hebei, Shandong and Henan that the sales range of corn produced in the interior has been continuously narrowing in recent years, and because of poorer quality and no obvious price advantage, the volume of interior-produced corn sold to Guangdong, Guangxi and other places has been continuously declining. Moreover, in recent years the corn processing enterprises in Shandong and other newly emerging major sales areas have encountered the problem of shrinking downstream industries, and demand for feed corn shows no sign of recovery either, so the demand prospects for interior-produced corn are not optimistic. The market expects that before the new crop of corn comes onto the market, the mainstream price will move toward 1.05—1.10 yuan/jin, and the possibility that small vendors' purchase price will approach 1 yuan/jin cannot be ruled out.
Some market participants believe that the obvious decline in corn prices in Hebei, Shandong and Henan is merely a microcosm of the national corn market. Because the domestic corn market is fairly seriously oversupplied, inventories are huge, and substitutes have an obvious price advantage, the national corn market price is generally sluggish. In addition, in the new crop year, domestic corn planting area is expected to continue to grow, and output will remain at a multi-year high, so the long-term trend of corn prices is rather pessimistic.