Corn prices rise to 1.35 yuan, a rare surge in a decade
Recently, a sharp rise in the price of a single kernel of corn is producing rather far-reaching effects across many downstream sectors.
“In May and June of this year, corn in the Dalian area was still 1.05 yuan to 1.1 yuan per jin, but now it has risen to around 1.35 yuan. Such a high price for corn is, at least in the most recent 10-plus years, the highest.” Industry insiders say that corn, which seems so distant from city dwellers, actually deeply affects their lives; price fluctuations in this bulk commodity are directly tied to the price trends of meat, eggs and milk on urban dining tables.
The crazy corn
“These past two days, the corn price in the Dalian area has been 1.33 yuan to 1.35 yuan per jin. I have run a pig farm for 15 years and have never encountered corn this expensive.” The person in charge of a large pig farm in Dalian explained that in May and June of this year, the corn price was 1.05 yuan to 1.1 yuan per jin, which was a relatively normal market; from late July to early August, it rose to about 1.25 yuan per jin; afterward, the corn price climbed all the way to the current level of around 1.35 yuan, and it is said that in some areas recently the corn price even briefly broke through 1.4 yuan per jin.
“In the same period last year, the corn price in the Dalian area was about 1.1 yuan per jin; this year it has risen by more than 20% year on year.” The person in charge of a chicken farm in Dalian said that recently corn has behaved rather crazily, and the speed and scale of its price increase are both very rare.
“Today, the latest arrival price of corn at the Port of Dalian (601880, stock forum) is 2530 yuan to 2570 yuan per ton. At present, what arrives at the Port of Dalian is basically all high-quality old corn from Northeast China.” A person with knowledge of the matter revealed that this round of rapid corn price increases began in late July and has continued until now. Only in the last two days has the arrival price of corn fallen back slightly, though the fluctuation is not large.
Traders have no surplus grain on hand
Why has corn, a bulk commodity whose price has always been relatively stable, recently seen such an excessively rapid price increase? In response, the person in charge of the aforementioned pig farm said: “Every year from August to November is a period when corn supply is in the lean season before the new crop arrives, and during this period corn price increases are almost routine. However, this year, because some major grain-producing areas suffered drought and corn production declines were relatively severe, the market formed a rather pessimistic expectation for corn output, thus driving its price into an "abnormal rise".”
“Starting in May, the state carried out competitive auctions of corn. Because traders had relatively little surplus grain on hand at the time, their desire to bid at higher prices was very urgent, and this pushed corn prices up. However, recently, new grain from some production areas in Northeast China has already appeared sporadically on the market, and in addition some traders still have a certain amount of inventory on hand, so their enthusiasm for bidding has somewhat faded, and corn prices have therefore pulled back slightly.” The aforementioned person with knowledge of the matter analyzed that in May, corn traders did not have much surplus grain on hand because: previously, the government-led stockpiling volume was huge and absorbed a large amount of corn from Northeast China.
“In July and August, corn supply on the market was indeed relatively tight. Taking the northern ports as an example, including Dayaowan Port, Beiliang Port, Jinzhou Port (600190, stock forum), Yingkou Port (600317, stock forum) and Dandong Port, the total volume of corn arriving at port in July was only 1.19 million tons, while in the first seven months, the cumulative corn arrivals at these northern ports were 14.79 million tons; even calculated on average, the "normal arrival volume" of corn per month should also be above 2 million tons.” A relevant person with knowledge of the matter in Dalian said that this set of data confirms the relatively tight corn supply at that time.
In addition, the drought in many areas this year was also a related cause of this round of corn price increases, and at least affected the market's expectation for the future trend of corn. “As of late August, the provinces where drought had the greatest impact on corn growth are Henan and Liaoning…… it is estimated that this year's national corn production reduction may exceed 6 million tons.” A relevant expert from the China Grain Network said in an interview with the media.
Growing corn in Dalian
Returns doubled in 10 years
The high corn price is undoubtedly good news for local farmers in Dalian, but there is still some uncertainty about turning their harvest into money. “At present, Dalian farmers have almost no old corn left on hand. If this market can continue into February or March of next year, when this year's newly produced corn in Dalian enters its concentrated sales period, the returns for corn-growing farmers will be relatively considerable.” Industry insiders said that according to preliminary statistics, this year the corn planting area in the Dalian region exceeded 2.8 million mu.
According to the farmers, in a normal year, the average corn yield per mu in the Dalian area is more than 1000 jin, and some high-yield fields can reach more than 1500 jin. Calculated at the current 1.35 yuan per jin of corn, the gross income from one mu of cornfield is 1350 yuan to more than 2000 yuan; after deducting expenses such as seeds, chemical fertilizer and ox ploughing, the net income is 600 yuan to 1200 yuan. Of course, in the cost calculation, the farmers' own labor input is not deducted.
“In recent years, the returns from growing corn have been rising year by year. Compared with 10 years ago, at that time the corn price was less than 0.5 yuan per jin, and at that time the average yield per mu was only 700 to 800 jin, so the net income from growing one mu of corn was only 200 to 300 yuan.” Mr. Jin, a farmer in Dalian, said that driven by higher yields and rising corn prices, over 10 years the returns for Dalian farmers growing corn have at least doubled.