Corn Prices

Corn prices in China have snapped the upward trend and declined recently. In particular, after the trading rate and price both suffered a decline in the 14th round of auction in late August, the market sentiment in long positions changed, and holders rushed to sell stockpiles to lock in profits.

As of Sept 1^st, China’s corn prices were 2,233 CNY/tonne, a decline of 558 CNY/tonne or 2.53% from a high of 2,291 in late July this year. The price prevailed at 2,310-2,460 CNY/tonne in Shandong, a month-on-month decline of 60-194 CNY/tonne; old corn (690-700 g/L) was 2,170-2,180 CNY/tonne at Jinzhou port in Liaoning, a decline of 120-130 CNY from a month earlier; old corn was 2,330 CNY/tonne at Guangdong ports, a decline of 120 CNY from a month earlier; old corn was 2,380 CNY/tonne at Zhangzhou port in Fujian, a decline of 120 CNY from a month earlier.

Corn Auctions

Market participants came to witness the real cooling in the 14^th round of corn auction on August 27th. Of all 3.99 million tonnes of corn offered in this auction, only 3.55 mln tonnes was sold, with the trading percentage at 88.92% and price down 40 CNY to 1,919 CNY/tonne. It was the first time this year that the trading percentage saw a decline. In this round of auction, there was corn produced in 2016 and 2018, in addition to 2015 which had appeared in previous auctions. The upset prices for 2016 and 2018 corn went up by 50-410 CNY/tonne, a sign that the state policy was to maintain grain prices steady. Besides, China will continue to carry out corn auctions till late this month, according to market sources. This will slap the upbeat sentiment in the market.

Sinograin also held once reserved corn auctions in Zhejiang, Chengdu and Jilin during August 25-28. A total of 118,000 tonnes was offered, with only 29,000 tonnes or 24.4% sold, meaning that the trading rate fell for a fourth consecutive week.

Corn Imports

Up to now, 2.4 mln tonnes of corn in 2019/20 has been shipped to China. Besides, China has granted 10 mln tonnes of import quota beyond the tariff quota to a state-owned company, according to market sources. Moreover, China has also purchased 7.7 mln tonnes of U.S. corn for deliveries in 2020/21. Although there is still no official confirmation, China is striking deals at a brisk pace, which can be seen in the reports by the USDA. Private exporters reported to the USDA export sales of 408,000 tonne last Tuesday and 747,000 tonnes last Thursday of corn for delivery to China, as well as 140,000 tonnes to unknown destinations. And on Monday, private exporters reported to the USDA export sales of 596,000 tonnes of corn for delivery to China. The above will all be delivered in 2020/21 marketing year. In addition, some 20 mln tonnes of paddy rice over due will be sold as early as September, said market rumors. Hence, corn imports together with wheat and paddy rice sales will be a main method to fill the supply gap in China in the new marketing year.

New Crops

Summer corn sales get starting in Hunan and Hubei now and early-maturing corn will also go marketing in north China in September. Normally, corn crops from northeastern regions will flow into southern and northern markets, but currently, imported corn is in huge quantity in southern regions and northern processing companies are mainly consuming new corn now. Besides, some local enterprises in northeastern regions have stocked up adequate corn which can be relied on till the marketing of local new corn. Meanwhile, some feed plants have turned to wheat due to high corn prices. Hence, corn market will continue to come under pressure in September and may suffer higher risks of declines.