1. Price Trend

According to data from SunSirs, the domestic corn price fluctuated slightly in 2019. The average price of third-grade yellow corn on January 1 was 1,850.00 RMB / ton, and the average price on December 27 was 1,838.57 RMB / ton. The overall price fell slightly by 0.62% during the year. .

2. Market Analysis

Throughout the year, the price trend of the domestic corn market can be roughly divided into five stages:

Phase 1: From January to March, supply pressure continued to increase and corn prices continued to adjust weakly

Before the Spring Festival, the state's memory and grain trade continued to go out of stocks. The main players in the production and sales areas saw and waited. Some deep-processing companies slightly reduced their purchase prices.

In January, the domestic corn market prices remained weak. After the Spring Festival, as the temperature in Northeast China’s production areas gradually rises and spring sowing approaches, farmers ’willingness to sell grain continues to increase. Therefore, the amount of corn listed in the production areas continues to rise. The deep processing companies’ corn stocks are sufficient and the overall replenishment is low.

Under the pressure of market supply but weak demand, the corn market in the producing areas continued to run steadily. Port corn stocks continued to increase, port corn purchase prices continued to fall. Domestic live pig stocks continued to be low, and breeding and feed demand continued to weaken. In the first quarter, the overall market price of corn in domestic production and sales areas continued to weaken.

Beginning in mid-March, supported by good news such as the one-time reserve of corn in the Northeast producing areas and the postponement of the state reserve auction, some deep-processing manufacturers slightly increased the purchase price of corn, and the overall decline in the domestic corn market price has slowed down. Although the auction price of Inner Mongolia corn was all oversold, the policy starting price of 1,760-1,780 RMB / ton played a certain guiding role in the corn market price. With the support of the policy, the overall domestic corn market price in March weakened and stabilized.

The Second Stage: From April to May, grassroots food sources are gradually declining, and the state reserve auction has begun, and demand supports corn bottoming out.

Entering April, the remaining grain in Northeast China is becoming scarce. In addition, farmers are mostly busy preparing for spring sowing, and the circulated grain sources at the grass-roots level continue to decline. The main players of the trade are optimistic about the market price of corn market thereby be willing to increase supplement. Deep processing industry increase the corn’s purchasing price. Under such demand, the price of domestic corn price has increased.   

In May, the Northeast production area gradually entered the spring sowing stage. Farmers were too busy to sell grain, and the supply of high-quality grassroots sources was still tight. In order to stimulate the arrival of some enterprises, the purchase price was raised again to drive the corn market price in the production area to continue to run strongly.

In late May, the state reserve auction was launched, and the enthusiasm of participants in the auction was soaring. The overall transaction was hot and mostly at a price premium. Under the support of policy factors, the bullish sentiment of the trade subjects in the production and sales area was strong, which led to the overall rise in the market price of corn in the production area. Regional corn prices have subsequently risen. Corn prices in production areas have risen sharply, and freight factors have led to less inflow of grain from Northeast China.

Deep processing companies in Shandong and North China have raised their prices to make up the stock. The unwillingness to sell of the main grain storage traders have further promoted the overall recovery of corn prices, and the domestic corn market prices have risen sharply in the second half of the year.

The Third Stage: From June to mid-July, the state reserve auction runs normally, corn prices fluctuate slightly.

In June, as the state reserve auction gradually became normal, the enthusiasm for participation in trade auctions declined, and the state reserve auction premium has eased.

In the mid-term, the state reserve auction transaction rate fell to 63.88%, and the average transaction price fell slightly to 1,678 RMB / ton.

On June 27, the volume and price of the state reserve corn auction fell again, the transaction rate dropped to 33.57%, and the average transaction price fell to 1,667 RMB / ton. The corn grains are out of the warehouse one after another, and the policy transaction prices continue to decline, which drives the corn market prices in production areas to rise slightly. The arrival prices of corn in ports and sales areas are slightly weaker and relatively stable after adjustment.

As the state reserve corn has been released from stocks, trade participants are more cautious in auctioning, and the state reserve auction transactions have gradually entered the stage of volume reduction and price stabilization.

Up to July 25, the 2019 temporary reserve corn has been auctioned 10 times, with a cumulative auction volume of 39.74 million tons. The actual transaction volume was around 18.18 million tons, with an overall transaction rate of 45.73%. The transaction rate went from over 80% in the initial auction to less than 18% in late July. The transaction volume price gradually became rational. Under the support of the policy, the domestic corn market price was affected by the state reserve auction corn ex-warehouse price, and it remained stable overall.

The Fourth Stage: Late July to mid August, extreme weather is sudden and corn price is relatively high.

Continuing rainfall in late July caused the production volume of corn in North China to be low. Supported by demand, some deep processing companies in North China raised their purchase prices slightly.

In August, due to the extreme weather brought by typhoon "Lichma", the port corn’s arrival volume has declined. The corn price in the port area rise slightly. The domestic corn market price is relatively high and slightly strong.

The Fifth Stage: From late August to December, the new corn is seamlessly connected, and the corn market price continues to fluctuate downward.

Beginning in late August, early spring corn was scattered in some areas. At the same time, the arrival of corn in the port gradually recovered after the extreme weather factors receded. The fresh corn was seamlessly connected. Some deep processing manufacturers in North China and Shandong were still in shutdown and maintenance. The overall downstream has wait-and-see attitude. Corn market trading was light, and corn prices fell slightly under pressure.

In September, the domestic new season corn entered the market from south to north, and the wait-and-see attitude of the trading entities in the production and sales areas became stronger. The state reserve auction transaction rate continued to hit a record low. At the beginning of the month, the overall transaction rate fell to 6.74%. At the end of the month, the transaction rate fell 3.01%.

Original stocks continued to be released while new grains entered the market one after another. The main stocks of grain-storage trade were strengthened. The overall supply of the domestic corn market was rather sufficient, and the price of corn in the Northeast production areas continued to adjust weakly.

Purchasing prices in the port area slightly weakened following the price of corn in the producing areas. The North China production area was affected by new grains. Deep processing companies continued to slightly reduce the purchase price.

Under the influence of many negative factors, the domestic corn market prices continued to adjust weakly in September.

After the National Day (October 1), the state reserve auction continued to operate normally. Due to the gradual increase in the number of listed corn markets in the producing areas, trading entities remained cautious in purchasing and selling. The state reserve auction transaction rate fell again. In early October, the state reserve auction transaction rate fell to 2.24%.

The final auction of the 2019 State Reserve Corn held on October 17th, the turnover was 3.13%. The overall transaction rate continued to be low. The average transaction price was 1,706 RMB / ton, and the outbound price was relatively stable. The policy is gradually out of stock, coupled with the increase in the number of corn in the new season, the supply of corn market in the production area is gradually loosening. And the continued increase in pressure in the corn market has caused the price of corn in the production area to continue to weaken.

In November, snowfall weather occurred frequently in production areas, and corn sales progress was slower than in the same period of the previous year. The peak of the new grain load was postponed overall. The low arrival volume caused some deep-processing enterprises to raise prices and replenish stocks, driving the domestic corn market prices slightly stronger.

Near the end of the year, farmers in the production areas are increasingly willing to sell grain. After the weather has improved, the amount of corn listed has gradually increased, and the arrival of deep processing manufacturers has continued to pick up. After the manufacturer's inventory has been replenished, the corn purchase price has been reduced again.

Live Pig Market: Affected by African swine fever and swine cycle factors, the domestic pig population in China will continue to be weakly adjusted in 2019. The price is still at a very high level, and the enthusiasm of farmers to fill up the pens continues to rise. In the fourth quarter, the total domestic pig stocks stopped falling and rebounded, and the demand for corn feed will pick up, which will support the market price of corn in the future.

3. Market Forecasting

Up to December 20, the main producing areas had acquired 81.23 million tons of mid-late rice, corn and soybeans, a year-on-year decrease of 13.09 million tons. Heilongjiang, Shandong and other 11 main production areas have cumulatively purchased 32.59 million tons of corn, a year-on-year decrease of 3.99 million tons.

Li Wenxu, a corn product analyst at SunSirs, believes that the domestic corn sales progress is slower than in the same period of last year, and the domestic corn market supply pressure in the market is not declining. In addition, the downstream corn starch market demand is generally not busy in the peak season. The overall price is still low. The continued weakness in downstream corn demand cannot support the domestic corn market price rebound.

It is expected that the domestic corn market price will continue to weaken and fluctuate downward in early 2020. After the peak of the new season corn price, the domestic corn market price will gradually pick up.

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