Summary:Before the National Day holiday, the A-share market was strong, driving a rebound in corn futures prices. Corn prices in Northeast China weakened due to cooling and frost, while prices in North China rebounded but lacked momentum. Rumors of state grain reserve purchases have increased, and policy support may boost corn prices.
A-Share Market and Corn Futures Rebound
Before the National Day holiday, the A-share market was particularly impressive. As of the close on September 30, the Shanghai Composite Index closed at 3336.5 points, up 8.06%, and the Shenzhen Component Index closed at 10529.76 points, up 10.67%. The release of funds and media coverage significantly increased the attention on stock indices, and there was also increased policy support for the real estate market.
The macroeconomic surge led the main corn futures contract 2411 to rebound from a low of 2105 yuan to 2225 yuan. However, there are differing long-term views on the corn market. By the sixth day of the National Day holiday, the market had largely moved away from the holiday atmosphere. Corn prices in Northeast China remained weak, while prices in North China rebounded to between 2000-2200 yuan/ton, but the upward momentum weakened, tending towards volatility. In October, corn enters the peak supply period, and there is a need to be cautious about increased supply leading to price drops.
Corn Price Trends and Changes
Corn Price Trends in Northeast China
After the National Day, most areas in Northeast China experienced cooling and frost, leading to the start of mechanical harvesting in many parts of Heilongjiang. Farmers’ attitudes towards selling grain are divided; some sell immediately after harvesting at prices around 900-1000 yuan/ton, while others plan to store the grain and observe the market. This year’s prices opened significantly lower compared to the same period last year and continue to decline. For example, the price for corn with 14% moisture content in Suihua, Heilongjiang, dropped from 2135 yuan/ton on September 23 to 1950 yuan/ton on October 6, a cumulative drop of 185 yuan/ton. Due to the low prices of corn in Xinjiang and Northwest China, Northeast corn transported by rail to Southwest China lacks a price advantage, leading to persistent weak prices.
Corn Price Rebound in North China
In late September, corn prices in North China experienced a sharp decline, followed by a significant rebound at the end of the month and the beginning of the National Day holiday. For example, the price for corn with 15.5% moisture content in Weifang, Shandong, rose from a low of 2050 yuan/ton to a high of 2180 yuan/ton on October 2, and then to 2128 yuan/ton on October 6. Most deep-processing quotes in North China rebounded by more than 100 yuan from their lows, and prices are currently at a low point. The quality of the new grain is relatively good, with a significant portion flowing to the south. The consumption of new grain is faster than last year, but the surplus of old grain in North China is still significant, so the total grain supply may not be much lower than last year.
Policy Support and State Grain Reserve Purchases
Recently, there have been numerous rumors about the state grain reserve purchasing corn, mainly due to the rapid price decline. If large-scale purchases begin in North China, it would align with the “bottoming out” protection and directional guidance following excessive price drops. However, the first purchases are taking place in Heilongjiang. On October 6, the state grain reserve in Shuangcheng, Heilongjiang, started the first phase of corn purchases at a price of 2100 yuan/ton for third-grade national standard corn, compared to 2560 yuan/ton at the Harbin reserve at the same time last year, a significant price difference. Recently, the state grain reserve’s procurement volume has increased significantly, and official analyses and statements on the autumn grain market are also positive. If policy support is strong, it could have a positive impact on corn prices.
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