How will corn prices trend after the auction ends at the end of June?
Looking at the corn market trend, a rising phase began after the Spring Festival, and by mid-March prices in many regions broke through 2000 yuan per ton. But then, as the auction pace accelerated, market grain supply gradually became more ample and prices gradually declined, and with three consecutive auctions in April, each releasing a massive 7 million tons into the market, corn prices were pushed completely into a trough. As of now, corn prices are at 1950 yuan per ton. As for the market direction after the May auction ends, here are a few brief observations.
Insufficient remaining grain on the market
It is now May. According to market estimates in April, farmers had less than 20% of their grain remaining, and now the remaining grain on the market is likely less than 10%. Under such conditions, after the auction ends, market corn supply can only turn to farmers and grain traders. At that point, a price increase is bound to be highly likely, and this is precisely the lean season when the market is at its most short of supply.
Quality still commands a premium
Judging from the corn in previous auctions, the corn quality is basically old corn from before 2015, and some of the auctioned corn cannot even be used for deep food processing and can only be used for industrial purposes, which shows the quality of the corn from the temporary reserve auctions. After the temporary reserve auctions end, the grain in farmers' hands is basically 2017 grain of superior quality, very suitable for feed use. At the moment when market supply is at its most short, how could prices not rise?
Auction impact eliminated
From the auctions in March, it can be seen that each auction volume was actually very small, just tens of thousands of tons each time. But people had strong expectations for future temporary reserve auctions, and both traders and corn deep-processing enterprises held back from purchasing corn. Under such circumstances, corn had no way to rise. But once it is confirmed that the temporary reserve auctions have ended, there will certainly be considerable room for an increase.
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