Author: Shao Haipeng
This year, corn prices took 4 months to reach a high point, but after 4 months they returned to the level at the beginning of the year.
At the same time, from January to July this year, my country imported 15.13 million tons of corn, a year-on-year decrease of 16.7%.
Among them, 1.54 million tons of corn were imported in July, a year-on-year decrease of 46.3%.
On the one hand, the price of corn has fluctuated greatly, and on the other hand, the import volume of corn has dropped. The "flame out" of corn has caused market attention.
Industry insiders believe that the ups and downs of the corn market and the sudden drop in imports are closely related to the domestic supply and demand situation, and to a large extent, affect the mentality of traders and the rhythm of grain sales.
As a food variety that takes into account both grain and feed, corn consumption accounts for more than 60% of feed consumption, about 30% of industrial consumption, and less than 10% of food consumption.
China's current food security is also highlighted as "feed food security".
In the context of relatively stable supply and demand of rations, special attention should be paid to ensuring food security with feed grain security.
According to the website of the Ministry of Agriculture and Rural Affairs on August 17, the Ministry of Agriculture and Rural Affairs responded to the proposal No. 4270 of the Fifth Session of the 13th National People's Congress, saying that in recent years, in accordance with the decisions and arrangements of the Party Central Committee and the State Council, relevant departments have actively and orderly promoted work related to grain import. , vigorously expand the diversified import channels of grain, continuously optimize the structure of grain import varieties, and increase the domestic supply of feed grains such as corn, barley and sorghum through various measures.
Corn is one of the three major staple food varieties in my country, and a high domestic self-sufficiency rate must be maintained to avoid being controlled by others.
The corn market that first rose and then fell
In the first four months of this year, corn prices rose all the way.
On May 5, the price of corn futures rose to 3046 yuan / ton, reaching its peak.
Subsequently, the price began to dive rapidly. On July 25, the price of corn futures fell to a minimum of 2,548 yuan/ton, and fell to 500 yuan/ton in more than two months, a drop of 16.4%.
The reasons for the rise in corn prices are divided into two aspects: domestic and international.
Gu Jian, a researcher at Brick Grain and Grain, told the First Financial Reporter that from a domestic perspective, after a large amount of wheat replaced high-priced corn in the early stage, wheat inventories continued to decline.
The unfavorable weather during the wheat harvest period in the production areas in 2021 has affected the quality of wheat, and the delay in planting of winter wheat in 2021 has led to an increase in corn prices in early February 2022.
From an international point of view, in March 2022, the conflict between Russia and Ukraine exacerbated the tension in the global grain supply, and a large proportion of domestic corn was imported from Ukraine. The conflict between Russia and Ukraine caused market concerns about the import of corn and barley in the later period.
Overlaying the uncertainty of food production in many countries affected by the weather, the food crisis is expected to continue to ferment.
As for the rapid decline in corn prices, the reason is that the supply is loose and the demand is weakening.
Since mid-May, wheat in southern Henan and Hubei has entered the harvest season, and the domestic wheat yield has gradually been realized, changing the market's concerns about the reduction of wheat production in the early stage, and grain prices have gradually fallen.
In addition, the US government raised interest rates, commodities generally fell sharply, grains from the Black Sea region began to be exported one after another, and the demand for downstream feed and deep processing was weak.
At the beginning of August, affected by the weather speculation, the price of corn futures rebounded, but the overall situation did not improve much.
In the main corn-producing areas in China, the flooding of farmland in many places in Northeast China has become the focus of the current market.
Some institutions have investigated and found that there is a certain reduction in production, which may cause farmers to be reluctant to sell and delay the progress of new grains.
At present, the domestic corn price is under pressure. The overall situation is that the domestic corn feed demand and deep processing demand continue to be weak, and the corn market is light in purchase and sales.
From the perspective of feed demand, the high temperature weather continued in most parts of the country after the beginning of autumn, the feed intake of the terminal livestock and poultry was significantly lower than the normal level, and the overall feed output was also at a seasonally low level.
According to data from the Feed Industry Association, in July 2022, the national industrial feed output was 24.58 million tons, a year-on-year decrease of 6.8%.
From the perspective of deep processing demand, affected by the off-season of starch demand, the finished product inventory of deep processing enterprises is high, and the pressure on shipment is relatively large.
The drop in the operating rate of deep-processing enterprises directly leads to the weakening of the demand for deep-processing of corn, which is negative for the spot price of corn.
Gu Jian said that in the short term, the supply of corn may be further relaxed, and the focus will gradually decrease.
For traders, the sudden rise and fall of corn prices also affects their market mentality and grain sales pace to a large extent.
With the continuous weakening of corn prices, the bearishness of the corn market continued to ferment, and the enthusiasm of grain holders such as traders in some major producing areas increased.
At the same time, the expiration time of third-party funds is approaching, and the pace of traders' shipments has accelerated.
Zhang Zhixian, deputy dean of the China Grain Net Yida Research Institute, also told the first financial reporter that in July this year, there were more rainy weather in corn production areas, and it was difficult to store and store corn, which accelerated the pace of delivery.
In addition, the sharp drop in corn prices after the second half of last year has also increased the cautiousness of corn traders to stock up this year.
While imports remained relatively high, directional auctions of overdue paddy continued. This year, over 23 million tons of overdue paddy was sold to replace corn in the feed field, and the contradiction between supply and demand of feed grains eased.
From an international perspective, with the sharp drop in the international crude oil, grain and other commodity prices, the import cost of corn has dropped significantly, affecting the domestic corn market price.
"One Pig is Big" and "One Grain is Big"
The domestic self-sufficiency rate for corn has been relatively high.
However, in recent years, with the rapid development of the deep processing industry and the feed industry, there is a small gap between the supply and demand of corn in some years.
Before 2020, corn imports were all below the import quota of 7.2 million tons, accounting for 1.5-3% of the domestic corn supply.
In 2020, imports will increase to 11.3 million tons.
In 2021, the import volume will soar to 28.35 million tons, accounting for nearly 10% of the domestic corn supply that year.
According to data from the General Administration of Customs, from January to July 2022, China's grain imports decreased by 7.1% year-on-year, and corn imports decreased by 16.7% year-on-year.
Among them, corn imports in July decreased by 46.3% year-on-year.
my country's major corn importers are the United States and Ukraine.
Since the conflict between Russia and Ukraine, Ukrainian corn exports have been blocked, and my country's corn imports from Ukraine have dropped sharply, and the source of imports has shifted to the United States and South American countries.
In the first seven months of the year, corn imports fell, mainly due to a sharp drop in corn imports from Ukraine.
Zhang Zhixian said that in the first seven months of this year, China only imported 4.91 million tons of corn from Ukraine. In July, it did not import corn from Ukraine, while it imported 6.73 million tons from Ukraine in the same period last year.
Among the 4.91 million tons of imported corn, 4 million tons were imported in the first quarter, which means that after the conflict between Russia and Ukraine, the amount of corn imported from Ukraine dropped sharply.
In addition, rising import costs also weakened the willingness to import.
Gu Jian also mentioned that under the influence of supply blockage, the global corn price continued to rise, China's corn import cost was forced to rise, the profit of corn import was greatly reduced, and the overall corn import volume decreased.
Since the national temporary corn inventory has been cleared continuously, the domestic corn supply and demand have maintained a tight balance, and the corn price center has moved up significantly.
In the first half of the year, under the circumstance of high international corn prices, China imported a large number of sorghum, rice (mainly broken rice), cassava, etc. with obvious price advantages as substitutes for corn feed demand.
According to data from the General Administration of Customs, in the first seven months of this year, imports of sorghum, rice and cassava increased by 24.5%, 43.5% and 1.3% year-on-year respectively.
Behind the large-scale import of corn and corn substitutes is the prominent phenomenon that China has "one pig dominates" in the production structure of animal husbandry, and "one grain dominates" corn in feed grain.
Gu Jian suggested that in the future, China should pursue a diversified supply path of livestock products and feed grains.
In terms of animal species structure, it is necessary to protect the basic production capacity of live pigs, improve the ability of major epidemic prevention and control to promote the stable development of the live pig industry, and fully mobilize the enthusiasm of cattle and sheep breeding to increase the proportion of beef and mutton in meat production and supply; It is necessary to actively develop high-quality forage industries such as alfalfa and silage corn, encourage the development of grain and forage rotation and the combination of farming and animal husbandry, and improve the supply capacity of high-quality forage.