The price of corn is lowered, and the price of pig food may be reduced.

The National Development and Reform Commission (NDRC) recently released data showing that the price of pig grain across the country has fallen. On September 30, the price of pig food was 7.82, down 0.89% from September 23. Jiang Chao, a macro-bond researcher at Haitong Securities, believes that the current pig-to-grain ratio remains at around 8, far exceeding the break-even line of 6, indicating that the only factor that pushed up CPI in the early stage has also ceased. CPI may be lowered to less than 2% in the fourth quarter. This opened up the stock trend of the relevant companies for the central bank to cut interest rates.

The so-called pig grain price ratio refers to the ratio of pig appearance price to corn wholesale price, which is the balance yardstick for measuring the profit and loss of pig farming. From the perspective of the industry as a whole, pig prices began a rapid rise after reaching their lowest point in March 2015, leading to a rise in the price of pig food.

In August, the national consumer price index (CPI) rose 0.5% from the previous month, up 2.0% from a year earlier. From a month-on-month point of view, the sharp rise in food prices such as pork, fresh vegetables and eggs in August is the main reason for the higher month-on-month increase in CPI. Pork prices rose for the fourth month in a row in August, rising 7.7% from a month earlier, affecting CPI to rise by 0.25%.

China's CPI index is heavily influenced by domestic food prices, with pork accounting for the largest proportion of CPI, about 10 per cent. Although the proportion of pork in residents' meat consumption has gradually decreased, the weight of pork price in CPI has not changed.

In September, pig prices began to decline. From the middle of the year, the supply of live pigs began to increase, the intention of slaughtering enterprises to reduce prices became more and more obvious and formed a scale, and the decline of pig prices accelerated. Especially into the last ten days, the period before the Mid-Autumn Festival, due to the slaughtering enterprises to increase price pressure, farmers concentrated out of the hurdle and panic selling behavior.

At the end of the National Day holiday, market analysts said that during the holiday period, terminal demand was lower than expected, the boost was not strong, and pig prices remained volatile and falling. The obvious increase in supply since September led to the imbalance between supply and demand, the phenomenon of periodic oversupply appeared, and pig prices continued to fall. This is an adjustment to the excessively high overall market trend.

The price of corn fell

Corn is not only one of the main feed sources of animal husbandry, but also an important raw material for industrial products, which is widely used in food, medicine and other industries. Since May this year, the domestic market price is unusual, not only did not rise, but showed a continuous downward trend.

In the first ten days of September, the average wholesale prices in domestic producing and selling areas fell by 14.9% and 11.8% respectively compared with the same period last year. Among them, prices in Huanghuai producing areas of North China fell 20.2% from the same period last year, the lowest level since May 2011, and prices in some areas have fallen below 2000 yuan / ton.

There is a realistic basis for the decline in prices, not only due to the past historical reasons, that is, the huge pressure on domestic corn stocks, the persistent downturn in consumer demand caused by the economic downturn, and the recent adjustment of temporary collection and storage policies. as well as the new corn harvest is about to face a new round of supply pressure and other reasons.

Driven by the temporary collection and storage policy, the comparative benefit of corn is obvious. In recent years, the planting area of corn has increased, and the yield has also increased. In 2012, when China's total grain output increased 9 times in a row, the output of corn exceeded that of rice for the first time, becoming the largest grain crop variety in China. According to statistics, from 2012 to 2014, the purchase of temporary storage corn for three consecutive years has accumulated more than 180 million tons, while the volume of competitive sales in the same period is only more than 30 million tons. Domestic corn stocks are increasing and supply pressure is increasing. The pattern of phased oversupply has further intensified, which has suppressed the trend of corn prices.

On the demand side, the downstream demand for deep processing continues to be weak, and the growth of corn industrial consumption is weak. Feed processing enterprises are obviously squeezed by the high cost of raw materials and the doldrums of the aquaculture industry. Although pig prices have rebounded significantly, pig production capacity has still declined significantly, and it will take time to return to the normal level. According to monitoring data released by the Ministry of Agriculture, in August 2015, the stock of live pigs decreased by 10.4% compared with the same period last year, and the stock of fertile sows decreased by 14.2%. Corn consumption continues to be in the doldrums, so that the rising space of domestic corn prices has been compressed.

Due to the serious upside-down of corn prices at home and abroad, China's corn imports have increased significantly since the beginning of this year. In addition, both feed enterprises and corn processing enterprises have imported substitutes to reduce production costs, which further aggravates the oversupply of corn in China.

In addition, the area of corn has increased steadily this year, the climate is generally favorable, and it is expected that there will be a bumper harvest of corn this year. After the large-scale listing of new corn, the market supply will increase significantly, the market will face a new round of supply pressure, and it is expected that domestic corn prices may continue to be under pressure in the later stage.

The 2015 corn temporary storage acquisition policy, which will be launched on November 1 this year, while lowering the temporary storage corn listing purchase price, the corn temporary storage acquisition policy requires strict implementation of national standards and will no longer relax relevant quality standards such as mildew content. Corn that fails to meet the quality requirements shall be purchased by the local government in accordance with the system of responsibility of provincial governors for food safety and the local responsibility system for food safety.

Last year, the relevant state departments issued a clear signal that "the excessive grade difference of mildew grains will be further expanded or more stringent acquisition quality standards will be implemented in 2015." This year's temporary corn purchase policy is also consistent with the wheat minimum purchase price policy in the strict implementation of quality standards.

According to market analysis, with the reduction of corn temporary collection and storage prices in 2015, the acquisition quality standards will be stricter than in previous years, resulting in a significant reduction in reserves. This leads to the cautious attitude of processing enterprises in purchasing, and one after another reduces the purchase price, while traders speed up the sale of stored grain, leading to a decline in market prices as a whole.

Corn added to the adjustment of temporary storage policy

In September this year, although the official notice continued to implement the temporary corn collection and storage policy in the three northeastern provinces and Inner Mongolia in 2015, the purchase price of temporary storage corn was lowered to 1 yuan per jin (the third-class quality standard of the national standard). Compared with the highest level of 1.13 yuan per jin in Inner Mongolia and Liaoning in 2014, it has been reduced by 11.5%. This means that the temporary corn collection and storage policy, which has been implemented for eight years, has begun to be adjusted.

The minimum purchase price policy began in 2004. Looking back now, this year also coincides with the beginning of China's total grain output to achieve "eleven consecutive increases". Subsequently, grain production began to harvest year after year, and grain prices faced greater downward pressure. In order to avoid repeating the old road of "cheap grain hurts farmers", the state decided to implement the minimum purchase price policy plan. Since 2004 and 2006, the minimum purchase price system for rice and wheat in the main producing areas has been implemented respectively. Since 2008, corn, soybeans, rapeseed, sugar, etc. have also begun to implement temporary storage policies. In 2011, the temporary cotton storage system was established. However, these two systems, which were established under the background that the price of domestic agricultural products was lower than the international price at that time, Ye Xingqing, Minister of Rural Economy Department of the Development Research Center of the State Council, said that they had great limitations from concept to operation.

However, the price support policy centered on minimum protection price and temporary storage has been implemented for many years, and the path dependence of all parties in the market on this policy is becoming more and more serious. Since the start of temporary storage, the price of storage has shown a steady upward trend. Take corn as an example, its storage price has risen from 1500 yuan/ton in 2008 to 2200 yuan/ton in 2014. However, if we continue to buy corn in the market, corn stocks will continue to remain high. At present, corn stocks in China are as high as more than 100 million tons, while the total annual output of corn is only 200 million tons. The huge inventory not only brings storage pressure, but also makes the value of corn shrink sharply.

However, the government has begun to adjust. Looking back from 2014, when the government decided to implement the target price reform of cotton and soybean in some areas on a pilot basis, the policy of temporary storage and storage of rapeseed has begun to shift this year. So far corn has joined the ranks.

Previously, the Ministry of Agriculture published a document entitled "Summary of the Reply to No.1480 Proposal of the Third Session of the 12th National People's Congress" clearly stated that corn, soybean, cotton, rapeseed and other varieties with large demand elasticity, long industrial chain and high degree of market correlation at home and abroad should pay attention to giving play to the decisive role of market formation price, guide production through market price signals, regulate supply and demand, and promote the sustainable and healthy development of the industry. This means that in addition to the cotton and soybean that have been piloted, the prices of corn and rapeseed will also bid farewell to the temporary collection and storage policy and move towards a pattern in which prices are determined by the market.

The reason for choosing corn lies in the obvious will of the state to protect staple food in order to ensure food security. Ma Wenfeng, an agricultural analyst in Beijing and a special economic analyst of Xinhua Agency, once told the reporter of First Financial Daily that the distinction between rice, wheat and corn is because their status is different. The former two are rations, while the latter has a long industrial chain. In addition to eating, it can also be used for feed and industrial processing."To guarantee rations."