What is the course of the "de-stocking" corn market?

As soon as the news of the sharp reduction in the purchase price of corn production in 2015, the domestic corn market immediately entered a downward channel and fell into the most depressed situation in recent years. In this market which has been "policialized", the trend of policy dominates the evolution of the market. From a fundamental point of view, huge inventory pressure, supply is very adequate, while terminal consumption is weak, industry overcapacity, supply and demand fundamentals are also negative. It can be said that, on the whole, corn will face a long period of weak market.

What is the trend of the future policy? We also need to analyze what the policy needs to solve most. At this stage, for the country, the most urgent need of the corn market is "destocking". The purchase of more than 150 million tons of temporary storage last year and this year alone has put great pressure on government finance and warehousing, and it can even be said to be an "unbearable burden". Therefore, "destocking" must be the main tilt direction of the current policy.

On the one hand, reduce the "supply side" of inventory. This means lowering temporary storage prices and allowing more food sources to flow to the market rather than into the treasury. So we saw a sudden sharp reduction in corn storage prices this year, leading to a cry from farmers. The agricultural policy, which has always taken the protection of farmers' income as an important goal, has been adjusted so rapidly this time, which shows that the problems caused by supporting the market have reached the point where it is impossible to solve them immediately.

On the other hand, it is to mobilize the "demand side" of inventory as much as possible. Also conveying the signal of urgent "destocking" is that the special auction of grain held by the state at the beginning of this year linked the quantity of grain auctioned to the allocation of import quotas for the first time. In May this year, the state also successively introduced subsidies for Heilongjiang, Jilin rice and corn-related enterprises to stimulate enterprises to enter the market and digest inventory.

At present, in the case of falling market prices and depressed downstream demand, Jilin Province once again sacrificed a sharp weapon of subsidies and issued a notice on raising the subsidy standards of corn processing enterprises. This has played a certain role in boosting the current depressed corn market, especially for the local deep processing enterprises in Jilin, but in the overall weak market environment, subsidies can not fundamentally change the trend. The role of the subsidy policy implemented in Heilongjiang and Jilin in May is less obvious, which is why there is this "increased subsidy".

In view of the fact that at this stage, "destocking" is still the main purpose of corn policy, so the market will not have much room to rise, the overall "easy to fall but difficult to rise". Of course, in this process, the state will appropriately introduce some similar policies, or may restart the demand for deep processing to avoid excessive drop in food prices and protect the interests of farmers. In the period of great change in the temporary reserve policy, the state has to take into account the interests of all parties, many policies with different goals may be implemented at the same time, the market chaos will remain for a period of time, and we need to pay close attention to various changes.