2016 corn market analysis: forecast corn prices in early December or take a turn for the better!

What is the trend of corn prices at the end of 2016? This year is different from the past, corn market prices are volatile, some earlier periods of sharp ups and downs in the market and restricted transportation and other factors also make procurement operations difficult. Grain quality and cycle are very difficult to grasp, and according to experience, this year, the start-up of feed factories is relatively low, consumption has been greatly reduced, to a large extent curb market prices, so manufacturers need to accurately grasp the opportunity to reduce procurement risk.

Frequent price fluctuations and transportation become the main problem.

Since the beginning of the fourth quarter, new season corn has been on the market all over the country. affected by a large area of rainfall this year, the quality of corn drying and storage in North China has declined somewhat. The low corn prices in Northeast China have made it a "good heart" for domestic grain enterprises, but the lower corn prices have not made enterprises feel benefited. The main reason is transportation. Especially recently, many feed manufacturers have reported that high transportation costs, vehicle scarcity and unstable transportation cycle have affected the production of some manufacturers, so that feed manufacturers have to increase their inventory to more than 20 days. on the one hand, this greatly reduces the liquidity of enterprise funds, on the other hand, high inventory also means that manufacturers must bear the risk of corn price reduction. The most important thing is that the low price of corn coupled with high transportation costs, so that the production cost is not significantly reduced, but the liquidity of corn is significantly reduced, manufacturers in addition to purchasing corn in the surrounding areas, inter-provincial transportation is very difficult. Especially in Sichuan, Jiangxi, Hunan and Hubei provinces, some local manufacturers have even stopped production without expectations, because the quality of corn in nearby provinces has declined due to the impact of rainfall. Corn in the northeast region is very difficult to purchase due to the difficulties of difficult to find cars, high freight and long transportation distance, and the inventory is unsustainable. until now, this situation has not been significantly improved.

Corn shows a slow downward trend.

If it is said that corn prices will fall in the future, it is basically the view of the vast majority of people in the industry at present, but after several big ups and downs, not only buyers are physically and mentally exhausted, but traders and farmers are also suffering from strong sentiment to sell. This can also explain why it is difficult for market prices to fall in the current situation of good weather and ample corn supply, but as mentioned above. The Spring Festival is coming soon, and farmers are more willing to sell for reasons such as loan repayment and pre-Spring Festival expenses. It is also understood that some southern manufacturers have begun to increase the use of substitutes such as barley and sorghum. After all, compared with the high price of corn, substitutes cannot be completely replaced, but a small amount of addition can appropriately reduce production costs. It is expected that although there is an opportunity for corn prices to fall in the future, the decline is relatively small. After all, there are many restrictions on the entry of imported substitutes this year.

The purchasing area in early December may be critical.

Combined with the above situation, whether from the price of corn, or out of the consideration of the procurement and transportation cycle, late November to early December may be a more reasonable procurement time. Judging from the current understanding, this is indeed the case. recently, some manufacturers in the southern sales areas have reflected that they will begin to increase the purchase of corn in early December and increase their stocks to make reserves before the end of the year. The planned purchasing area is the northeast producing area, mainly due to the consideration of annual purchasing habits and grain quality. If you look at North China, it is more tangled. According to common sense, local corn does not involve high transportation costs and should be the first choice, but the heavy rainfall during the drying period of local grain this year has led to high moisture, mildew and toxin content. this makes it a concern for manufacturers whether there can be a significant improvement in the quality of corn in the later stage. After December, once the stock demand of local feed manufacturers increases, the closer it is before the Spring Festival, the greater the role of supporting corn prices, or to a certain extent boost market prices. In the absence of clear policy support, the overall market restocking time may be earlier than in previous years, especially in the southern sales area, the impact of logistics is greater.