Who Set the Main Tone for the Rise in Corn Prices?
Recently, the rise in domestic corn prices has slowed, but the overall price level remains firm. The extremely high volume of temporary state reserve purchases of corn in Northeast China is the main reason driving corn prices upward nationwide. However, the earlier sharp rise has overextended market expectations for the future, causing price growth to slow to varying degrees in some areas, and even to decline. Grain-using enterprises, faced with high-priced corn, will consider increasing the use of other substitutes in their purchasing and feed production, which is another factor limiting the rise in corn prices.
Since mid-to-late February, domestic corn prices have continued to climb, with the rise slowing over the past week; as of March 27, the national average corn price remained at 2428 yuan/ton, up 30 yuan/ton from the same period last week and up sharply by 118 yuan/ton from before the holiday. By region: corn market trading is active, and although the rise has slowed, corn prices in the main producing areas, ports and southern sales areas remain firm.
Northeast producing area: Supported by temporary state reserve purchases, corn prices in the Northeast producing area remain firm. However, because reserve purchasing work differs across regions, Northeast corn prices have diverged. In some areas of Liaoning, temporary reserve warehouses suspended purchases, causing local prices to fall slightly; in Jilin and Heilongjiang, enthusiasm for temporary reserve purchasing remains relatively high and supports firm local prices. As of March 27, the average corn price in the Northeast producing area was about 2250 yuan/ton, up 80 yuan/ton from before the holiday.
North China producing area: Corn purchase prices in North China have also been driven by the Northeast temporary reserve program and have continued to rise, already at a high level. As grassroots grain sources are basically exhausted, grain purchasing enterprises continue to raise purchase prices, and corn prices in the North China producing area are expected to continue operating at a high level. As of March 27, the average corn purchase price in the North China producing area was about 2215 yuan/ton, up nearly 90 yuan/ton from before the holiday.
Ports: Temporary reserve purchasing has progressed rapidly, and this year's corn price uptrend in Northeast China started earlier, causing more corn to remain in the Northeast producing area, with outbound shipments noticeably lower than in previous years, keeping corn at northern ports on a high trend. At the same time, driven by this, corn prices at northern ports have remained firm. Corn prices at southern ports are on an upward trend, but unlike northern ports, corn inventories are on a downward trend, mainly because grain-using enterprises in the south actively took delivery after the holiday. However, inventories of substitutes such as barley and sorghum have now exceeded corn, and feed enterprises mostly base their purchases on these, restricting the rise in corn prices.
Southern sales areas: Grassroots corn inventories have bottomed out, causing corn prices in sales areas to rise accordingly. At present, enthusiasm for corn purchasing among deep-processing and feed enterprises has slowed slightly, mainly because grain-using enterprises, faced with high-priced corn, will consider increasing the use of other substitutes in their purchasing and feed production, which also suppresses the momentum for corn price increases in sales areas.
Overall, the upward trend in the domestic corn market is basically established. Excessively large temporary reserve purchases and the gradually recovering breeding industry have both become favorable supports driving corn prices higher. Although the earlier sharp rise has overextended future expectations and may limit or pull back price gains, the overall environment is still guided by bullish factors.