The price of corn is rising too fast and there is a false high in the short term.

Recently, the domestic corn market is affected by tight supply and increased demand, and corn prices continue to strengthen. Due to the continuous increase in purchase prices in Northeast China and the rising trend in the market in production and marketing areas, corn prices have reached a new high in recent years. Market monitoring shows that at the beginning of April, the average purchase price of corn scales in the national production areas was 1787.85 yuan / ton, up 29.31 yuan / ton over the same period last month; the average out-of-warehouse price of corn scales in the national production areas was 1799.62 yuan / ton, up 34.34 yuan / ton over the same period last month. At present, many grain enterprises believe that the current domestic corn demand is on the eve of seasonal recovery, corn prices rise too fast for the market to continue to accept, with the increase in corn supply, corn prices are difficult to rise rapidly.

Favorable factors

First, the policy has a strong support for corn prices. In April, the state continued to implement a temporary collection and storage policy in the northeast producing areas, subsidizing the acquisition of northeast corn by qualified enterprises in the sales area. In order to support enterprises to do a good job in the acquisition of temporary storage corn, the corn drying cost loan has been adjusted to 70 yuan per ton since March 10, 2010, compared with 50 yuan previously. The increase of drying cost will increase the out-of-storage cost of corn, and also support the price to a certain extent.

Second, multi-competitive acquisition is conducive to the price rise. As the current operating profits of deep processing enterprises are relatively rich, since March, northeast deep processing enterprises have raised prices for acquisitions, diversified market main body acquisition competition is very fierce, acquisition prices continue to rise. At the same time, boosted by policy subsidies, sales area feed enterprises and Chinese prefix enterprises continue to increase their acquisition efforts in northeast producing areas, and Chinese prefix enterprises continue to set a record for the purchase price of corn in Northeast China this year. At present, there is only one month to go before the deadline of the procurement subsidy policy, and even if the acquisition in some areas has approached or exceeded the level prescribed by the policy, the purchasing cost of the acquirer is still high, which still supports the medium-term price of corn.

Third, grain enterprises still need to replenish inventory. Due to the large inventory consumption of enterprises during and after the Spring Festival, most of the deep processing enterprises and feed enterprises need to replenish inventory, and the purchasing enthusiasm of enterprises is high. In order to meet the needs of production, recently, most corn processing enterprises in Northeast China have adopted the strategy of raising prices for harvest, which plays a certain role in guiding the rise of market prices.

Fourth, the impact of the drought on the lagging market will continue. Since the beginning of this year, the southwest of China has experienced the worst drought in a century, and most areas are of the level of severe drought and special drought. According to data from relevant state departments, the total corn output of Yunnan and Guizhou provinces last year was 9.5 million tons, accounting for 6 per cent of the national output. If it is not alleviated for a long time, then the production reduction is expected to be extremely strong, and the impact time and extent will be very great. Recently, the drought in southwest China has continued to heat up the transaction of inter-provincial corn, and the transaction price in the sales area has generally exceeded 2000 yuan / ton.

Negative factors

First, the market volume of corn will continue to increase in the future. This year, due to the long cold weather in winter, the time for farmers to store corn is prolonged, the time for farmers to concentrate on selling grain goes back, and the phased supply pressure in the later stage of the market is still inevitable. On the one hand, with the warmer weather, farmers in various parts of Northeast China have begun to raise funds for spring sowing production, and their cash realization capacity will be enhanced; on the other hand, due to the recent rising corn purchase prices, some farmers have recognized the current purchase prices, and their enthusiasm for selling grain has increased, and it is estimated that the amount of corn sold will continue to be enlarged in the later period. Moreover, with the continuous rise of temperature, it is more difficult to store corn, especially some high moisture corn is easy to mildew. Due to more rain and snow last winter and this spring, farmers in Northeast China have more high-moisture corn. It is reported that the moisture content of corn in Heilongjiang is generally higher than that in the same period of previous years, and the moisture content is 28% 35%. At present, some corn has been mildewed individually. Once these high moisture corn are concentrated on the market, the impact on the market can not be underestimated.

Second, the feeding demand of the aquaculture industry is not optimistic. As the main consumption area of corn, the feeding demand of live pigs in the breeding industry has been paid much attention. Affected by the decline in post-holiday demand and the over-slaughter caused by the recent foot-and-mouth disease epidemic, pork prices have fallen sharply, and the price of pig food is significantly lower than the break-even point. Relevant research data show that since March, pig feed sales in most parts of the country have dropped by 20%, 30%, and some of them have dropped by about 40%. As the current pig market supply is still abundant, and corn prices remain high, the profit situation of the downstream aquaculture industry is not optimistic, and the enthusiasm of farmers is not high. The loss of pig farming will reduce the demand for corn feed, which will bring some pressure to the corn market.

Third, the domestic corn price is high and it is difficult to export. Customs data show that China's corn exports in February were 320 tons, down 23500 tons from the same period last year and 41600 tons from the previous month. A total of 42260 tons of corn were exported from January to February, ending the continuous increase in China's corn exports since October 2009. The main reason is the decline of international corn prices, while the high price of corn in China weakens the export competitiveness.

To sum up, objectively speaking, the recent rise in the corn market is caused by the imbalance between supply and demand in the short term, and the drought in the southwest also brings a certain boost to the market. In the case of sufficient domestic corn stocks, it is estimated that the tight supply and demand situation in the market will be alleviated soon. On the one hand, with the warm weather, farmers have the possibility of centralized grain sales, periodic supply pressure is inevitable; on the other hand, the continuous decline in pork prices makes corn feed demand relatively weak, corn feed demand is not optimistic. Therefore, the price of corn is falsely high in the short term, it is difficult for the price to rise rapidly, and some areas where the price is too high may even have the risk of falling in stages.