The purchase of corn in the market has become a "double-edged sword" and the purchase price is the key.

As China's corn has entered the harvest season, the issue of corn storage market has once again become the focus of attention in the industry. Although the industry has its own views on the temporary storage market, in the face of the current situation of corn overproduction in China, temporary storage is still an important means to resolve the quantity contradiction. However, the price of temporary storage has also become the key to the survival of the whole corn industry chain.

This summer, the main corn producing areas in China experienced drought, affecting this year's corn production, but at the Seventh International Maize Industry Conference held in Chengdu on the 22nd, people in the industry agreed that this year was a bumper harvest year. Although it may be lower than the all-time high in 2013, with a yield reduction of about 5%, it is still expected to exceed the total output in 2012.

Chai Xiaofeng of Cofco Trading Co., Ltd. believes that since the drought occurred in 2009, the state has invested a lot in drought resistance in agriculture. In terms of the impact of drought, the scope and intensity of this year's drought are not as strong as those in 2009, and the impact on overall output is much lower than market expectations in the first half of the year.

However, the current demand for corn processing in China has lagged far behind the production capacity of corn. According to the data provided by the National Grain and Oil Information Center, in the past two years, the supply capacity of that year has been higher than the consumption of nearly 40 million tons.

"according to the balance analysis made by the State Grain and Oil Information Center, if the income of the temporary corn storage market reaches 40 million tons this year, it will help the circulation market achieve a balance between supply and demand." Li Xigui, Market Monitoring Department of the National Grain and Oil Information Center, said.

However, the news from the lower reaches of the corn industry chain is not optimistic. Due to the rising price of state reserve in recent years, the cost of corn processing industry continues to rise. Although downstream enterprises reduce costs as much as possible through large-scale merger and reorganization, technology upgrading and other ways, they are almost on the verge of loss.

"We have lost at the starting line." Zhu Yongsheng, Department of Biochemistry of Cofco, said that due to the high cost of corn in China, it is difficult for corn deep processing enterprises to move forward, while the low price of corn in the international market puts great pressure on domestic enterprises.

Zhu Yongsheng pointed out that China's corn deep processing industry lost money for five of the seven years. "now China's corn deep processing industry as a whole is at the break-even point."

The news from the feed industry is not optimistic, especially in the pig industry, where the hoarding situation is more serious. Although it helps to increase the demand for feed in the short term, it is negative in the medium to long term. An industry source revealed that the current operating rate of the feed industry is very low, or even less than 60%.

Downstream enterprises are struggling at the break-even point, which objectively reduces the actual demand for corn. In terms of quantity, the surplus corn is digested by the state reserve, which is conducive to the balance of supply and demand in the market, but the high collection and storage price leads to the lack of raw materials for downstream enterprises, while the storage capacity of the state reserve continues to be urgent. In addition, the pro-price sales policy of the State Reserve auction only increases the cost of taking volume from the state reserve.

The key is how to set the purchase price. At present, the temporary storage price of corn this year has not yet been announced. "now cotton and soybeans are piloting the target price mechanism. I hope that corn can be included in the pilot as soon as possible." One industry insider said.