Can the corn bear market come to an end

Recalling the corn market at the end of July and the beginning of August, we were still talking about "when the decline will stop." in just a few days, the price of the corn market in North China, represented by Shandong, has rebounded continuously. at present, some areas have returned to the era of "1 yuan". To bring a touch of "bright color" to the corn market in the bear market, corn prices in north and south ports and sales areas have been followed by the sound of "rising". Market participants describe this rally as "regional", "phased", or "reasonable" or "revised". Recently, some market participants called it "unusual". Indeed, the current domestic corn market is under the background of a large number of policy grain sources and the listing of spring corn in the south one after another, and at the same time shrouded in the atmosphere that the big corn inventory urgently needs to be released, what is the reason for the rebound in corn prices at this time? Can the bear market trend come to an end? It has become a problem worthy of our deep consideration. In addition, there has been a new situation in "auction", "spring corn" and "weather" that we have been concerned about before. recently, there is some "entanglement" in the corn market under the coexistence of "bright spots" and "worries". The specific analysis is as follows:

One of the "unusual": corn prices in North China have partially returned to the "1 yuan" era. The purchase price of deep processing enterprises in some areas of Shandong Province has rebounded since the beginning of August, and the price of high-quality corn has returned to the era of "1 yuan". This paper analyzes the reasons for its price rebound: first, it is during the period when the new and old corn in the market is "green and yellow". There is a phased shortage of corn supply, the quantity of enterprises is generally on the low side, and some enterprises with low inventory passively raise prices and buy. Second, at present, the number of southern spring corn entering the North China market is relatively limited, spring corn in North China has not yet been listed in bulk, and the rigid demand of downstream enterprises supports strong prices in North China.

The second of "unusual": the price of corn in north and south ports and sales areas is not far behind. Driven by the rebound in corn prices in North China, corn prices in north and south ports and sales areas have changed the previous downward trend and followed by the rebound since mid-August. up to now, corn prices in northern Jinzhou and Bayuquan ports are quoted at 1770-1800 yuan / ton, according to quality. the theoretical closing price is 1820-1850 yuan / ton, up 10-20 yuan / ton over last week, and the rotation corn quotation in Jilin, Liaoning, Guangdong port is 1950-1970 yuan / ton. The deviation corn quotation is 1860-1900 yuan / ton, which is 40 yuan / ton higher than last week. At the same time, corn prices in southern sales areas have rebounded synchronously. Take Jiangxi as an example, at present, the price of new corn around the local area has generally increased to around 1880 yuan / ton, and some high-quality new corn has arrived as high as 2000 yuan / ton.

The third part of "unusual": the price in the northeast producing area is not driven. Although corn prices in North China, southern sales areas and north-south ports have all rebounded, the northeast corn market is still not driven by its own supply and demand fundamentals, and its prices remain relatively stable, but affected by the boost of some deep processing prices in Shandong, the corn outflow from northeast China is growing at present. In terms of corn growth in the new season, there was little precipitation in the northern part of Northeast China last week. At present, the overall drought in most of Northeast Inner Mongolia, northern Jilin, central and western Heilongjiang and northern Liaoning continues, and there are signs of aggravation and spread. According to relevant meteorological reports, the precipitation in Northeast China has not been significantly strengthened in the next three days and needs continuous attention.

The fourth of "unusual": the sale of corn in temporary storage has improved significantly. Since the first ten days of August, the scope of seasonal rebound in corn prices has gradually expanded, and the temporary storage corn auction has also shown a good "trend". The low turnover rate of temporary storage corn auction has rebounded, on the one hand, reflecting the characteristics of insufficient surplus grain in the current domestic market. on the other hand, with the rotation of grain gradually out of storage and consumption, the number of enterprises relying on policy corn auction has also increased. According to the statistics of the National Grain and Oil Information Center, as of August 18, a total of 13.98 million tons of corn have been sold in policy auctions since August 18, including 7.46 million tons in Northeast China, 6.44 million tons in inter-provincial depots and 75000 tons in imported corns. however, compared with the huge inventory pressure of about 240 million tons, the post-storage corn "catharsis" has a long way to go. Therefore, although the temporary corn auction shows signs of picking up slightly, it is difficult to get rid of the overall pattern of hovering at a low level, and China's "huge" corn inventory and the potential pressure on the listing of new grain are the fetters of the weak market rebound after all.

The fifth of "unusual": the listing volume of southern spring corn increases, the quality is poor, and the price falls. Spring corn in southern provinces began to appear on the market one after another, which has lasted for about a month. Although the listing volume is increasing, its quality is general, and the price decline tends to be obvious. According to the statistics of relevant departments, Hubei corn has been listed in large quantities, Jiangsu Huaian and Xuzhou have been listed in a small amount, Anhui Bengbu, Bozhou, Shaanxi Xi'an, Hanzhong, Henan Puyang, Zhumadian, Shandong Taian and other places have been listed sporadically, with a price range of 1700-1920 yuan / ton, down 40-60 yuan / ton compared with the beginning of the listing. On the one hand, because the spring corn sowing areas in southern China experienced the worst flooding in several years this year, there was no harvest in some serious areas, and the quality of corn was seriously affected by continuous rainfall in other areas, while the continuous dry weather led to water shortage and drought and inhibited the growth of corn cobs, resulting in a decrease in spring corn yield this year, a small grain size in some areas and a unit weight of only 600-630g/L, which could not meet the purchasing standards of grain enterprises. On the other hand, the export price of first-class grain in the national standard of spring corn for the new season this year is generally between 1800 and 1840 yuan / ton, which is not recognized by the weighing market, and the willingness to buy and sell is light, so the new season spring corn has been mainly consumed locally since it began to appear on the market, and the difficulty of outsourcing has led to its prices falling continuously.

The sixth of "unusual": the decline of per unit yield caused by local drought causes "worry". Since mid-early August, extreme drought in some parts of China has aroused widespread concern in the market, especially in Inner Mongolia and the western part of Heilongjiang, as the main corn producing areas in China. Jilin and Liaoning also have news that there has been no rainfall for 20-30 days. According to incomplete statistics, as of August 18, the drought area of crops in Inner Mongolia, Jilin, Heilongjiang, Shaanxi, Gansu, Ningxia and other places has reached 4566.5 hectares. With a harvest of 405.4 thousand hectares, the forage yield in some pastoral areas in eastern Inner Mongolia has declined due to drought, and apart from Inner Mongolia and Heilongjiang, the absence of Rain Water in parts of Jilin and Liaoning for 20-30 days is also worrying. Although corn in most parts of Northeast China has passed through the critical pollination period safely this year, there has been no rain in many places so far, resulting in a lack of water during the filling period, which is not conducive to the growth of grain volume in the later stage. the persistence of some droughts will still affect the per unit yield of corn.

The above author briefly describes all kinds of "unusual" in the current corn market, and then gives his personal views on how long this rally can last, or whether the "bear market" can be reversed: first of all, carefully combing the reasons for the recent rebound in corn prices, it is not difficult to find that the stocks of grain enterprises are on the tight side, whether in the producing areas of North China or in the north and south ports or sales areas. The tight supply of high-quality corn is an important reason for this price rebound. From the perspective of supply and demand fundamentals of the domestic corn market, the huge inventory pressure and relatively weak market demand do not support its price rise. Second, the new pressure is gradually approaching. It is understood that at present, sporadic spring corn is listed in individual areas of Shandong, and the price is between 1700 and 1750 yuan / ton. A large number of spring corn is expected to be listed in late August. Hebei, Shaanxi and other places will have some high-quality corn on the market in about 10-15 days. This batch of corn has a high bulk density and basically meets the procurement standards of manufacturers. In addition, the listing volume is significantly higher than at present, which will once again increase the pressure on domestic corn supply. Finally, it is expected that the price of corn in the southern port will be the first to enter the downward channel. It is understood that about 350000 tons of domestic corn will arrive in Guangdong port in the next 10 days, and imported sorghum and barley will be concentrated in the port. Guangdong port energy feed supply will gradually relax, coupled with the southern spring corn supply is also expected to increase to a certain extent, the short-term rise in Guangdong port corn prices is not sustainable. It is expected to enter the descent channel earlier than North China.

Based on the above analysis, although the periodic rebound in the domestic corn market is reasonable, under the background of the temporary storage of corn in China, the policy variables and the listing of new corn have suppressed its upward space. Therefore, for this round of local corn price rebound before the listing of autumn grain, it can only be said to be at the end of the tension, it is only regional, phased, but also a temporary market behavior. Next, the superposition of new and old pressure leaves little time and space for corn prices to go up, and it is still difficult to turn a "bear market" into a "bull market". The key lies in the trend of policy. However, for high-quality corn, the current field of domestic corn circulation continues to be dominated by the rotation of corn in 2013, which has been stored for a long time, so the scarcity of high-quality corn may be reflected again before the batch listing of autumn grain, and its price rise will be a high probability event. At the same time, due to the severe local drought, the adverse impact on regional corn yield is worth paying attention to. Of course, what is more worrying than the weather is that the northeast temporary storage corn purchase policy was reformed for the first time in autumn. at present, the first batch of corn producer subsidies in Northeast China (nearly 30 billion yuan) have been issued, but whether there is a second or even the third batch after the first batch. Under the principle of "market-oriented pricing and separation of price and compensation", the national "how to make up" will be the key to affect the price positioning level of corn in the new season, and its impact on the corn market will be more worthy of attention.