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This is in sharp contrast to the end of the rally in corn prices to break down.
The opening of the curtain of destocking of temporary corn has put obvious pressure on the price of corn. Recent market rumors resurface, the starting price of corn storage is 1500 yuan/ton, March 16 from the targeted auction of 2012 moved storage corn, auction of quadrant alcohol production enterprises, an auction volume is not allowed to exceed 90 days of use. After grain production, the local provincial government will give a subsidy of 200 yuan/ton in the special fund for grain. After April 20, the auction of 2013 temporary storage corn began, the price of 1500 yuan/ton, no longer subsidized. The starting price is 300~400 yuan/ton lower than the listed price of the current deep-processing enterprises, which has a significant effect on reducing costs and improving profits. However, due to the poor quality of the overextended storage corn in 2012, the mildew rate or color change rate is high, resulting in the use of deep processing enterprises. However, although the use of extended storage corn by deep processing enterprises still needs to be dealt with, it still has a strong influence on the overall price of corn.
Since this auction will no longer follow the principle of down-price sales, the low starting price will bring significant downward pressure on the spot price of corn, especially the price of corn with quality deviation. The main 1605 contract of corn futures in the near month fell to the 1,800 integer mark, which is only one step away from the previous low point, and is still facing the risk of breaking in the short term. This will undoubtedly reduce the pressure on raw material costs for corn starch processing enterprises.
Due to the continued weak operation of corn prices, coupled with the opening of the national temporary storage corn drain door, the procurement of starch processing enterprises is more cautious, and the stock level of raw materials is always not high. The domestic corn starch price is stable and has fallen, and the starch by-product is weak. As of February 25, Jilin's corn starch processing loss of 157 yuan/ton, which is mainly affected by the high price of corn in the northeast, although the widening price gap between inside and outside the border makes the purchase price of corn starch processing enterprises slightly lower, but the overall Northeast corn purchase price is still maintained at 1800~1910 yuan/ton.
Shandong corn starch processing profit of 22 yuan/ton, Hebei corn starch processing profit of 5 yuan/ton, are maintained above the break-even line, mainly by the support of low corn in North China.
Considering that the 2013 storage corn auction will wait until April 20, then before this, North China corn will still dominate the market supply, in the context of the declining effective supply in the market, corn starch enterprises are affected by low inventories, continued procurement will push up North China corn prices continue to rebound pattern, is expected to gradually move closer to the Northeast corn prices.
The profit of corn starch processing in Shandong and Hebei is at risk of turning from positive to negative. Affected by this, the operating rate of starch processing enterprises has remained stable since the level of 75% in early 2016 fell to 50%, and the possibility of a sharp rise in the short-term operating rate is unlikely. Baocheng Futures believes that the stable operating rate will restrict the substantial growth of corn starch production, and with the gradual recovery of downstream consumption, starch prices will rise steadily.
