Corn faces a "three declines" this year, yet market prices remain weak

This year's corn is not just facing a double decline - yield per unit area is down, total production is down, and quality is down! To put it precisely, it should be called a "three declines." The shortage in total corn production will create a strong stimulus for corn prices, but as for the current market, corn prices are still finding it hard to rise. Since May, the temporary storage program has released 8 million tons of corn onto the market every week, and this auction policy has continued to this day.

Although the market transaction rate has declined somewhat now, the auctioned corn still provides effective support for market supply. And there seems to be no sign of the temporary storage auction policy coming to an end. As of now, the temporary storage program has auctioned over 62 million tons of corn this year, far exceeding last year's auction volume of over 54 million tons. Due to the temporary storage policy, corn prices this year likely will not see large increases, though there is still some room for gains.

Corn supply is short this year

This year, both the corn planting area and corn yield per unit area have declined. After planting, corn suffered widespread drought, and a while ago, high temperatures and drought caused incomplete pollination of corn, creating strong expectations of reduced production for this year's corn. This year, the corn sown area decreased by 495,000 hectares, with estimated production of 211 million tons, a reduction of 3%. Corn supply this year will become even tighter.

Corn demand is increasing

Due to the country's strong destocking efforts, corresponding subsidy policies have also been introduced for corn deep-processing enterprises, stimulating growth in corn demand. Secondly, the gradual recovery of the livestock industry has stimulated higher corn demand from the corn feed processing industry. According to institutional estimates, this year's corn supply shortage may reach over 20 million tons. With the arrival of the Mid-Autumn Festival and National Day holidays, the livestock industry will also enter a small peak period, which is expected to push corn demand even higher.

The increase in import tariffs

After our country imposed a 25% tariff on American agricultural products, our country's corn and soybean import volumes will both be greatly reduced, with soybeans being the most affected - soybean imports are expected to decrease by 10 million tons compared to last year. As one of the main sources of feed, soybeans' role may also be filled by corn. This is expected to stimulate an upward trend in corn prices this year.

In summary, with corn production this year facing numerous unfavorable factors, this is actually expected to form a substantive positive factor for corn prices, stimulating an upward trend. However, due to the existence of temporary storage as a market pacemaker, corn prices are also unlikely to see a major rally in the future.

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