Corn temporary storage policy or will change

Cheng Guoqiang, secretary-general of the academic Committee of the Development Research Center of the State Council, said at the 2015 China Rural Development High-level Forum recently held in Beijing that the temporary collection of deposits should be withdrawn as soon as possible. In fact, since the implementation of the target price subsidy reform pilot for cotton and soybeans last year, it has been predicted that corn will be the next variety to implement the target price subsidy reform pilot.

On July 10, the Ministry of Agriculture pointed out in the "Summary of the reply to recommendation No. 1480 of the third session of the 12th National people's Congress" that for corn, soybean, cotton, rapeseed and other varieties, attention should be paid to giving full play to the decisive role of market prices. For a time, whether the temporary corn collection and storage policy will withdraw and how the relevant policies will be adjusted has become the focus of the market.

Now both sides of the market are speculating whether the temporary corn collection and storage policy has reached a crossroads. In fact, the temporary collection and storage policy of corn is not because of insufficient corn supply, but is intended to stabilize commodity prices, ensure farmers' income, and guide planting. However, after the implementation of the collection and storage policy in 2008, the phenomenon of high inventory and high import of domestic corn has become more and more prominent, which will endanger the domestic planting industry and planting structure.

Industry analysts believe that the market originally expected that corn would also implement this measure after soybean and cotton changed from temporary collection and storage policy to target price direct subsidy policy, but in the end, the policy effect of soybean and cotton was not entirely satisfactory. it indicates that the corn collection and storage policy should not change to the target price system for the time being. However, according to the current situation, even if the collection and storage, due to financial pressure and temporary inventory eventually need to be disposed of, this year's corn collection and storage prices are likely to remain unchanged or slightly lower.

But in any case, for the corn market, it will have a repressive effect. At present, the market basically thinks that the state will lower the corn temporary storage purchase price this year, but there is still a big dispute about the extent of the reduction. It is expected that the purchase price of temporary reserves may be reduced this year, but the room for reduction is limited. If the purchase price is lowered, it will inevitably have an impact on the corn price. With reference to the reduction in the temporary reserve purchase price, the spot price of corn will also show a similar decline.

Since 70% of the pricing of corn starch comes from the price of raw corn, the price of corn has great guiding significance for the price of starch. at present, the weakness of starch futures price is also affected by the decline of corn futures price. Therefore, in order to judge the future starch price trend, we must first judge the corn price trend. At present, the corn price of 2013 yuan per ton in 1601 and 1979 yuan per ton in 1605 is based on early market rumors that the purchase price of corn temporary storage will be reduced by more than 400 yuan per ton this year.

Corn prices are rapidly falling, starch production costs are falling, and the market is generally worried about changes in corn storage policy in the new year, corn prices further fall to 1800 yuan / ton or even lower, when starch production costs will further decline. In the short term, some starch enterprises in Hebei, Henan and Shandong have shut down, reducing starch supply periodically, but at present, the whole market is worried about the further deepening of the global economic crisis, and the short-term benefits are not enough to support the rebound of starch prices. Starch has a long way to go.