International corn prices will tend to be stable in the future

The economy is cyclical, and international corn prices will not change much in the next 10 or 15 years.

Global corn stocks have reached an all-time high, and global corn supply easing will continue as acreage in South America increases in 2016 and 2017 and US corn production picks up. The current corn market price has fully reflected the global supply and demand pattern, and the price is close to the equilibrium point.

Overall, the planting area of corn in the United States is about 3502 hectares, which is relatively high. This year's unit yield is expected to reach 174bushels per acre, with a total yield of about 38.33 million tons.

At present, as it will take some time for Argentina and Brazil to return to international markets, US exports may be a little larger than they are now.

The current inventory in the United States is 16.47%, compared with 19.83% in 2004, which is relatively high in recent years. Judging from the situation in the United States alone, the overall supply of corn is still relatively adequate.

Another situation is that Brazil has adjusted its acreage, and it is expected that Brazilian production will be reduced by 18 million tons in 2015, and then reduced. It is estimated that there will certainly be restorative growth in 2016 and 2017, and Brazil's supply capacity to the international market will be greatly improved.

Argentina, where the acreage has changed greatly, is expected to be around 30%. At present, the total output will reach a record level of 36.5 million tons, an increase of 8.5 million tons over the same period last year of 28 million tons, and international sales reached 24 million tons.

Overall, production in Ukraine, including the Black Sea and the former Soviet Union, has rebounded from last year, with international supply of 17 million tons.

European corn is a little worse than other varieties, and the planting area is still tight, but there is a recovery in per unit yield, so the output in Europe is now 61.14 million tons, an increase of 12 million tons over last year, but European imports themselves have dropped slightly, about 12 million tons. The main reason was that the supply of barley and wheat was still very abundant in Europe at that time.

Overall, the global corn planting area reached 180 million hectares in 2013 and 2014. Although it has decreased in recent years, it has also recovered to 1.02 billion tons worldwide.

In terms of imports, the overall decline compared with last year is mainly due to falling demand, including China's demand for corn, sorghum and rice, which is also included in the UN report.

Over the past decade, corn demand has mainly been driven by the development of deep processing itself. In terms of demand distribution, the demand for population and food is increasing every year.

Both China and the United States are very concerned about industrial development, but from the understanding of the situation, it will take a long time for both the United States and China to change in the future, and the United States may not change any time soon.

According to the analysis of the domestic situation, we used to rely on policies, including the upgrading of domestic consumption, including the situation of high inventory in 2000, but now we are facing great obstacles. As a result, global feed demand is stable, but the share of exports is likely to shrink in the next few years.

In terms of total exports, US exports will recover somewhat this year, while Russia's exports will not be particularly large.

In terms of feed demand, if we look at Japan and South Korea, the demand in these countries is very stable.

We believe that China's market is constantly developing, and China's deep processing of feed will also reach a certain degree of saturation. However, compared with the United States, Europe and other developed countries and regions, China's feed industry is still at a relatively low level. In the long run, we think that prices in the global market will rise, but generally in a relatively stable and fluctuating stage.

The economy has a cycle. For an industry, the general cycle is about 25 to 30 years, and 10 years is a short cycle. Maybe in the next 10 or 15 years, we need to make normal compensation and rebalance for this big adjustment. I don't think there will be much change in the international corn price level.

This article is sorted out according to Chai Xiaofeng's speech at the 9th Corn Industry Conference.

Chai Xiaofeng: assistant to the General Manager of Cofco Trade Corn Center and General Manager of hedging Department