Corn market enters the off-season early, buying and selling in Hebei, Shandong and Henan turn cold

Recently, reporters traveled through the vast rural areas of Henan, Hebei and Shandong, where neatly stacked corn cribs could be seen everywhere, with some farmers' doorways even piled with more than 10 corn cribs about two meters high.

Corn trader Cui Ruibing, who accompanied the reporters from Futures Daily, said that since new corn came on the market in October, the corn purchase price has slid all the way down, now standing at only 1.05 yuan/jin. Even though the corn price is already in the low-price range of recent years, no one has come to buy.

“Supply is ample, demand is weak, and corn market buying and selling is sluggish, so farmers have no choice but to stockpile large amounts of corn at home.” According to Cui Ruibing, at present, apart from the Northeast region where the government leads corn purchasing and storage, corn market buying and selling in other regions, especially in Hebei, Shandong and Henan, has basically come to a standstill. Compared with previous years, the corn market in Hebei, Shandong and Henan has begun “hibernating” early.

“Liquor can't be sold, and alcohol is even harder to sell, so how could there be spare funds to buy corn?” Wang Jinjie, a corn alcohol producer in northern Henan, told reporters that a few years ago, alcohol was ordered out before it was even produced, but now a considerable portion is sold on credit, and the baijiu produced by the factory is even harder to sell because it has no reputation.

According to the reporters' understanding, the largest demand sector for corn -- industrial grain use -- still shows no improvement. Constrained by factors such as product backlogs at corn starch plants, feed mills entering the off-season for sales, and insufficient operating rates at alcohol plants, the phenomenon of excess corn supply in the Hebei, Shandong and Henan region is fairly common, and prices have been stable with a slight decline. Some traders estimate that corn prices will fall to 1 yuan/jin next spring, and there is basically no opportunity to step into the spot market.

Qi Kai, a corn purchaser in Hua County, Henan, told reporters from Futures Daily that in previous years at this time, he would purchase at least 500 tons of corn, yet this year he does not plan to stockpile even one jin, because everyone is bearish on corn prices. When mentioning his plans going forward, he seemed somewhat helpless: “A business where whoever buys loses money cannot be done. I'll wait until the market becomes clear before deciding what to do.”

“The quality of corn inside Shanhaiguan is not very good, and corn shipped from the Northeast has no government subsidy, so the company now mainly uses imported sorghum to replace corn.” Ma Feng, a feed producer in Guangxi, said that compared with imported sorghum, domestic corn has no advantage at all. In addition, feed mills now have little profit margin, so in order to compress production costs, many feed mills have adjusted their raw material formulas.

In recent years, corn produced in the Hebei, Shandong and Henan region, apart from being shipped south as feed raw material, has mostly been shipped to starch production enterprises in Shandong or consumed locally. Judging from the current prices of eggs, poultry and meat in the above three regions and the operating conditions of starch production and other enterprises, the probability of corn demand turning strong is very low. The overall decline in agricultural product prices and the difficulty in selling starch, alcohol and the like have left basically no opportunity for corn prices to rise.

Ma Feng believes that the trend of weak demand and falling prices in the domestic corn market, especially in the Hebei, Shandong and Henan region, will continue for a relatively long time. Next spring, as temperatures rise, farmers are relatively likely to sell corn in a concentrated manner. By then, corn prices may fall to their lowest point, and feed and corn deep-processing enterprises can seize the opportunity to purchase a portion of low-priced grain.