The auction time of temporary storage is up in the air to curb the rise of corn.

After a bottoming rebound in mid-April, the corn 1701 contract rebounded again at the end of May and began to rise, reaching a peak of 1642 yuan / ton on June 2, but the good times did not last long, and then fell into consolidation again, indicating that the pressure above is obvious. Under the expectation of a large-scale stock release, corn prices are supposed to run weakly, but they fluctuate unexpectedly. Is this the beginning of a real rise in corn, or is it a final struggle for decline?

The supply of high-quality food sources is becoming increasingly scarce.

At the end of April, the temporary collection and storage of corn by the state ended, with the purchase of 125.43 million tons of corn in 2015 and 2016, and the temporary storage of corn reached 280 million tons. The pressure of destocking is self-evident. After the end of temporary storage, the supply of high-quality grain sources in the market is increasingly scarce, and the trade grain has entered a tight situation. From a sub-regional point of view, after the end of temporary storage, under the joint development of rotation corn and provincial storage auction, the market in Northeast China is under obvious pressure, mainly stable and weak; in North China, due to limited surplus grain and improved demand from deep processing enterprises, there is a situation of phased supply less than demand, supporting higher corn prices and leading the rise in other parts of the country. At the same time, the sales area market rotation corn supply, enterprises have rotation corn signing, procurement is still mainly on demand, supporting the temporary stability of corn prices in the sales area.

The impact of targeted sales is less than expected.

The results of two targeted sales of corn show that the market premium transaction is more common, and the transaction rate is better than expected, reflecting the current situation of the shortage of high-quality food sources in the market. It is understood that the highest auction price of first-class grain is 1830 yuan per ton, and the transaction rate of corn in North China, Huang-Huai and southern regions is relatively high, reflecting the urgent demand for high-quality grain sources in the market.

Due to the quality deviation of targeted sales of corn, it can only meet the needs of some enterprises, so the negative impact of targeted sales on corn is limited, but as the temporary corn auction continues, the willingness of alcohol and ethanol enterprises to purchase may decline, which will affect the market consumption of overdue corn. According to the latest news, on June 6, the grain department of Heilongjiang Province announced a new batch of enterprises participating in targeted sales, including 5 feed enterprises and 2 alcohol enterprises. If the scope of orientation continues to expand in the later stage, it will be further negative for corn prices.

Imported grain will soon be concentrated in Hong Kong.

The latest data released by the General Administration of Customs show that from January to April, total corn imports were 1.8 million tons, surpassing imports in the same period last year and an increase of 430000 tons, or 31.1%, from 1.37 million tons last year. In April, China's corn imports rose to 1.155 million tons, the highest monthly import since 2014, with a month-on-month increase of 100.8% and a year-on-year increase of 720.4%. Sorghum imports were 630000 tons, down 24.2% from the previous month and 36.5% from the same period last year; barley imports were 240000 tons, down 23.2% from the previous month and 75.5% from the same period last year.

Although the state has made some achievements in restraining the import of substitutes, the import of barley and sorghum has declined in varying degrees, but with the continuous arrival of imported corn and alternative grains in Hong Kong, domestic corn will be affected to a certain extent.

Downstream demand shows signs of picking up.

Pig stock information from 4000 monitoring sites in April showed that the domestic pig stock rose slightly to 372.16 million, an increase of 0.6% over March, while the stock of fertile sows rose slightly to 37.69 million, an increase of 0.3% over March. As the pork price trend continues to improve, the pig-to-grain ratio is above 11, farmers are actively fattening, and the feed terminal demand is developing well, which to a certain extent boosted the consumption demand of corn.

Deep processing enterprises have actively replenished the stock.

Due to the sharp decline in the price of corn raw materials in the upper reaches this year, the profits of corn starch and alcohol enterprises have improved, the operating rate is higher than in previous years, and industrial demand has increased, which constitutes a phased support to the spot price of corn. It is understood that when the early market shorted corn, most enterprises maintained low inventory, but as corn prices rose, and the temporary storage and auction policy was delayed, because deep processing enterprises were worried about the uncertainty of policy, they began to actively enter the market to replenish the stock, thus supporting the corn purchase price of deep processing enterprises to go up. However, the corn consumption terminal demand is poor, generally, before really entering the peak consumption season, the increase of corn inventory caused by replenishment may become a long-term negative factor.

On the whole, in the case of the shortage of high-quality grain sources and the improvement of downstream demand, the price of corn is strong, but the pending auction time has restrained the rise of corn to some extent. With the temporary storage auction time to land in the future, beware of the risk of price decline caused by the increase of market supply. (author unit: Meierya Futures)

Follow the WeChat account of Lingtong in the financial sector [jrjstock]. We will provide you with early trading instructions every morning and forecast bull stocks by the daily limit.

Pay attention to the financial sector Wechat [jrjnews2013], exclusive investment review, pulse stock market trend, stage economic hot spot prospect.