Half of this year has passed, what is the price trend of corn in the second half of the year?

Now that 2018 is already half over, asking today whether the corn price in 2018 will rise seems a bit inappropriate; to be precise, it should be: can corn prices rise in the second half of this year? As for this question, I have expressed my view many times, and I still hold that after corn prices return to an upward track in July and August this year, they will run steadily, with an overall bullish outlook.

I once analyzed the soybean market for the second half of the year. Soybean and corn markets have many similarities, but also many differences, and the biggest difference is that corn prices are too heavily affected by policy! Take this year's overall corn trend: after the Spring Festival, corn prices kept rising, but after entering March, continuous grain reserve auctions directly caused the market to fall sharply. Even now, prices have still not recovered!

Judging from the recent grain reserve auctions, the auction reserve prices are getting higher and higher, while the market transaction rate is getting lower and lower. The transaction rate at the June 22 auction has dropped to 30%, a considerable gap from the over 90% transaction rate in the early auction period.

It can be said that under the dominance of policy, it is very difficult for the corn market to rise sharply, but this does not mean there will be no chance of an increase in the future. The biggest factor is the reduction in the effective market supply of corn. This is the basis for corn price increases in the future.

First, this year's drought in Northeast China directly led to a reduction in corn output, and this has become a consensus in the industry. In previous years, the corn seedling emergence rate in Northeast China was basically around 80%, but this year the emergence rate is only 30-50%, a relatively large decline, so a reduction in output is only reasonable; even if the corn is managed well later, a reduction in output is unavoidable.

Second, the China-US trade issue has also led to a decline in corn imports. According to the latest news in mid-June, China's 25% additional tax on corn imports from the US is basically a foregone conclusion. Although China's corn imports from the US are not large, the reduction in imports is still a major factor supporting domestic corn prices.

Third, China's corn planting area has decreased somewhat. The reduction in corn planting area comes from two aspects. On one hand, this year's drought in Northeast China led to a low emergence rate, and many farmers removed corn and switched to other crops; on the other hand, it comes from this year's strategy of expanding soybean planting area. The subsidy for soybean planting was even raised to more than 200 yuan, while the corn planting subsidy was lowered at the same time. Reducing corn through both aspects, it should be said that this strategy also conforms to current national conditions. As a result, domestic corn supply this year will also be relatively tight.

Finally, the production capacity of many corn processing enterprises has been effectively expanded this year. For the industrial deep processing of corn, the government has also provided corresponding subsidies, and this is probably also somewhat related to China's strategy of structural adjustment of the grain supply side.

Overall, with domestic corn supply tightening this year and consumer demand unlikely to increase, domestic corn prices are expected to receive effective support in the period ahead. In addition, domestic grain reserve auctions are also expected to stop. Therefore, in the period ahead, before new corn comes to market, corn prices are expected to receive strong support, and the price trend is viewed favorably.

This is Science and Agriculture, welcome to follow, and let us grow knowledge together.