Where is the "road" of corn?

In the autumn of 2016, through the actual investigation in the producing areas, it will be another bumper corn harvest year. At present, the latest forecast of the National Grain and Oil Information Center is that China's corn output will be 219 million tons, which is 2.5% lower than that of last year, mainly due to the decline in corn acreage. In addition, the consumption of corn in the new season in China is estimated to be 199 million tons, in other words, although the output has declined, there is still a surplus of 20 million tons between production and demand, coupled with more than 200 million tons of temporary storage inventory, the road of domestic corn destocking will still be very long.

At this time of autumn harvest, where is the way out for corn in our country? Planting benefits, grain sales, industrial development and price competitiveness are all "mountains" that weigh on the corn industry chain.

"Road" is separated in terms of price and compensation. After the two sessions this year, the state has given the guiding policy for corn production, and the separation of price and compensation is the general guiding principle. The policy of temporary storage and acquisition previously implemented has been cancelled, and the price of corn in the new season this year will be determined by the relationship between market supply and demand. From July to August, the state and various provinces and cities successively announced the implementation plans of corn producer subsidies. According to the estimation of the sown area predicted in the August market supply and demand report of the National Grain and Oil Information Center, the first batch of corn producer subsidies in the four provinces and regions of Northeast China should be equivalent to 120-136 yuan per mu, equivalent to 246-328 yuan per ton, of course, this is only an estimate. Judging from the current corn price expectations for the new season, even if the new corn falls to 1200, the producer subsidy policy will also ensure that farmers can get a certain income. Therefore, this policy can not only ensure the implementation of the pricing principle in the corn market, but also reduce the raw material procurement costs in the lower reaches of the corn industry chain, and promote the sales of corn in the new season to a certain extent.

Lu is acquired in Totti. After the two sessions, in view of the corn problem, the second policy given is the bottom purchase. So far, as the new season corn has not been listed on the market, there is no definite plan for this policy. The Tuodi acquisition has brought some hope to farmers and the local government, especially Heilongjiang, which has the most surplus production and sales, but the policy has not been landed for a long time, which makes it speculate in its mind. Judging from the current actual situation, the storage capacity in most areas has been full. Although the national auction has released part of the inventory, it is still a drop in the bucket relative to corn production. Therefore, it is not very operational to expect the state to underpin the acquisition, and the country has cancelled the corn temporary storage and acquisition policy. Enterprises are another possible main body of undertakings. By March 2017, when farmers sell grain, the state may entrust central enterprises to enter the market to make undertakings at market prices, and at the same time give enterprises corresponding warehousing or processing subsidies to ensure that the corn in the hands of farmers can be sold. Of course, this is only one possibility, and there may be a better solution then.

"Road" in international competitiveness. The last huge corn inventory pressure in China can be traced back to around 2000, when corn exports were subsidized and a considerable part of the inventory was solved. Japan, South Korea and Southeast Asia are all the digestion areas of corn in China. After the two sessions, the third key point for the corn issue is that corn prices should be in line with international standards, indicating the possibility that the corn export market, which has been closed for more than a decade, is expected to open this year. Moreover, the recent resumption of the export tax rebate for corn deeply processed products also reveals the re-cultivation of the export of corn industry. According to previous export market estimates, the annual digestion capacity of the current corn export market is estimated to be between 1000 and 15 million tons. Of course, this also requires that China's corn prices are internationally competitive. According to the US corn futures price of 350C / pu, the equivalent RMB price of US corn exports to Japan and South Korea is between 1150 and 1200. Therefore, China's corn to open the export market, according to the current price model estimates, can not be higher than 1200 yuan / ton price, of course, corn exports can also be subsidized, so that the subsidized export cost is lower than this price.

"Road" is in the lower reaches of the industrial chain. Corn consumption is mainly in feed consumption and industrial consumption. According to the latest forecast of the National Grain and Oil Information Center, corn consumption increased by 11.7% in 2016, with feed consumption accounting for 60% of the total consumption and industrial consumption accounting for 30.5%. The increase in feed consumption mainly comes from the increase in demand for pig feed. Large pig farms will gradually be put into production by the end of this year, and more enterprises will be put into production next year. Although it is still difficult to predict the scale of pig farming next year, it is very possible to achieve an increase of more than 10%. The corn deep processing industry has developed rapidly in recent years, although the national policy is mainly to eliminate production capacity, but due to the huge output of corn, the corn deep processing capacity expansion rate is still relatively fast, but the capacity utilization rate of corn deep processing industry is not high, with an annual average of 60-70%. This year, with the fall in corn prices, capacity utilization in the corn deep processing industry is expected to improve, although still subject to downstream demand, but should also be able to maintain overall growth of 7-8%. Digging deep into the downstream demand for corn, especially the demand growth brought about by large-scale farming, will lead to a return to the balance between supply and demand in the next year or two.

The situation of corn surplus formed in China in recent years cannot be solved overnight. It needs relatively long-term planning and prevention against adverse weather and other natural disasters. Four or five years ago, under the influence of La Nina weather, global corn production was greatly reduced, while the demand for corn in China was rapidly increased by the deep processing industry, and the production capacity of corn was difficult to match. Many international organizations predicted that China would liberalize corn imports. The Global Fund took this opportunity to wantonly hype international corn prices, and all kinds of scenes are still fresh in my mind. That is, in recent years, global crop yields have continued to be high, driving down the prices of many agricultural products, but this does not mean that the food crisis has been far away from China. Once the world encounters sustained disastrous weather, no matter how large the grain reserves may be, it may be difficult to make people feel safe. Therefore, on the one hand, rational planning of corn planting and production, on the one hand, promoting the scientific development of the downstream industry chain, and on the other hand, improving the corn reserve management model, is the successful "road" for the development of the whole corn industry chain for quite some time in the future.