Reveal the secret: how to change the temporary storage policy of corn market in 2015?

The domestic corn market is "very hurt" this year. As an old saying goes: grandma doesn't love my uncle. Corn prices, which should have been supported by temporary storage acquisitions, began to show a volatile downward trend in April, and last year's soaring market is gone forever. Since July, the decline in prices has increased and accelerated. Especially recently, new corn has been listed in some areas one after another, and the temporary storage policy of "price" protection to the market has frequently sent the news of adjustment or withdrawal, making the already depressed corn market have a long way to go.

First, how to change the temporary reserve policy?

Recently, rumors about the corn temporary reserve acquisition policy have emerged frequently, although there are many versions, but the future bears are still the mainstream. Regardless of how to adjust the policy, since the implementation of the temporary storage policy in 2008, both the purchase price and the purchase volume have shown a trend of increasing year by year, and this year has ended with a huge amount of 82.79 million tons. In addition, there were a large number of corn temporary storage acquisitions in 2013 and 2014. In terms of temporary storage auctions, only 28.783 million tons were dumped in 2014 and only about 5 million tons were auctioned by the end of July this year. Corn output is only the tip of the iceberg with high stocks. According to a rough calculation, the corn in the temporary storage has accumulated a high inventory of more than 150 million tons. If the corn in the new season is worth continuing the temporary storage and acquisition policy, when will the huge inventory be digested? Judging from the current market, the probability of withdrawing from the corn temporary storage policy in the new season is very small, and the reduction of the purchase price has basically been determined. However, the magnitude of the reduction in the acquisition price is also controversial, and some even claim that it will be adjusted to near the market price. In any case, there is no doubt that it has played a role in promoting lower prices in the future.

Second, what is the impact of alternative wind on the market?

In fact, another pair of black hands that must be mentioned to crack down on the corn market this year is the entry of a large number of imported corn and substitutes into the market. In recent years, the price of corn has gone up because of the temporary storage policy. As an important feed raw material, in order to reduce costs, major enterprises have to replace corn with cheap imported corn or crops such as sorghum and barley. It is understood that sorghum can replace 100% of corn in livestock and poultry feed, and theoretically, sorghum can also replace 100% of corn in pig feed. At the same time, imports of sorghum and barley are not subject to import quota restrictions like corn, so imports have increased sharply this year. China's imports of corn and substitutes, including barley, sorghum and corn wine dregs, hit record highs in July 2015, according to data released by the General Administration of Customs. Of these, China imported 1.11 million tons of corn in July, an increase of about 10 times over the same period last year, 1.28 million tons of barley in July, an increase of 68 percent over the same period last year, and sorghum imports in July reached 1.11 million tons, an increase of 183 percent over the same period last year. This is also an important reason for the continued weakness of domestic corn prices. However, the top priority now is the destocking of state reserves, so the state will also take measures. From September 1, China's Ministry of Commerce will require importers of barley, cassava, corn dregs and sorghum to register import details, which will restrict imports.

Third, when will the feed demand pick up?

As the saying goes: Rome was not built in a day. Although pig prices began a continuous upward trend in March, mainly due to tight supply, that is, a rise in pig prices caused by the low number of live pigs in stock, demand for corn continued to decline. The pig stock information released by the Ministry of Agriculture at 4000 monitoring sites in July showed that the stock of live pigs rose 0.20% from the previous month, down 10.43% from the same period last year, 0.59% from the same period last year, and 14.59% from the same period last year. Fattening pigs rose 0.29%, down 9.94% from the same period last year. Pig stocks in July ended nine consecutive months of month-on-month decline, showing a trend of stabilization. The rise in pig prices can indeed drive farmers (farms) to fill the fence enthusiasm, but whether it is fenced sows or piglets, the growth of pig stocks in the future needs a certain cycle, that is to say, the price rises and the stock stabilizes to increase feed raw materials. It takes a certain amount of time to transfer. Judging from the current corn consumption in feed factories, the average daily corn consumption in some small and medium-sized pig and poultry feed factories is 2-3 tons, less than 1/3 in the same period in previous years. The editor also pointed out at the beginning of this paragraph: freezing three feet was not built in a day, and it can be seen that in terms of downstream demand, corn prices will still have a depressed road to go.

Fourth, what is the performance of the price of new corn after listing?

Corn prices have continued to fall since mid-late July, and the decline has gradually widened. At present, the listing of autumn grain in various places is gradually increasing, the prices of new and old corn are moving closer in both directions, and the price center of gravity is constantly being revised downwards. Farmers in some areas of Liaoning have begun to sell new grain sporadically, with prices ranging from 1600 yuan / ton to 1680 yuan / ton. Henan, Shandong, Hubei and other places of new corn have been listed, the price of new corn has been greatly reduced after the listing, in some areas at 0.8 yuan / jin (1600 yuan / ton) low. However, according to the editor, some grain stations in Anhui bought a large amount of corn, leading to a wave of rising market. According to local farmers, it is rumored that the state may restrict the import of corn, thus promoting the demand for domestic corn and driving their grain accumulation. On the whole, the listing of new corn brings greater pressure on the corn market at this stage, and the price is expected to continue to decline.

Generally speaking, at this stage, the domestic corn market still has a bumpy road to go. From the perspective of the market environment, no matter how the national temporary storage and acquisition policy is adjusted, the market is still in sufficient inventory, coupled with the listing of new corn and the slow recovery of downstream demand, the editor believes that it is very difficult for the corn market to rise this year, and some institutions predict that the corn trading price this year will be less than 0.95 yuan will be a high probability event.