Summary：In 2025, the demand in the domestic corn planting and processing sectors is expected to increase. On one hand, the tight global inventories of corn and soybeans intensify the pressure on domestic raw material procurement, which stimulates domestic corn planting. On the other hand, the expected rise in crude oil prices boosts the demand for fuel ethanol, driving the corn deep - processing industry chain. However, during the development, challenges such as fluctuations in international market prices and unstable raw material supply are faced. Enterprises need to adopt corresponding strategies at both the planting and processing ends to cope with these situations.
Huaxi Securities' latest report indicates that in 2025, the domestic corn planting and processing sectors may experience an increase in demand. The main driving factors include:
1.Tight global supply: The tight global inventories of corn and soybeans may exacerbate the pressure on domestic raw material procurement.
2.Boost in fuel ethanol demand: The expected rise in crude oil prices stimulates the demand for biofuels (such as corn - based ethanol), indirectly driving the corn deep - processing industry chain.
I. Tight Global Supply
From a global perspective, the inventory situation of corn and soybeans is far from optimistic.
The supply - demand report released by the US Department of Agriculture in September shows that the global corn production has been adjusted downward by approximately 1.25 million tons to 1.2186 billion tons, and the ending inventory is expected to be 308.4 million tons, a decrease of 1.8 million tons compared to the previous month.
As for soybeans, although the soybean production in regions outside the United States has been adjusted upward, the overall supply pattern remains tight.
The global soybean ending inventory has increased by 300,000 tons to 134.6 million tons, but the increase is limited.
Domestically, China is highly dependent on soybean imports, and corn is widely used in fields such as feed and industrial processing. The tight supply situation in the international market will directly affect the domestic market.
On one hand, in order to obtain sufficient raw materials, domestic relevant enterprises have to participate in the fierce competition in the international market, which will undoubtedly drive up procurement costs.
On the other hand, the instability of international supply may lead enterprises to seek more domestic supply channels, stimulating the enthusiasm for domestic corn planting. When enterprises anticipate insufficient international corn supply, they will sign purchase agreements with domestic farmers in advance or increase the purchase price to encourage farmers to expand their planting areas, thus promoting the expansion of the domestic corn planting scale.
II. Boost in Fuel Ethanol Demand
The expected rise in crude oil prices has a significant stimulating effect on the demand for fuel ethanol.
When crude oil prices rise, the cost of traditional fuel increases. In contrast, fuel ethanol produced from corn is more competitive in terms of price.
The growth in fuel ethanol demand will directly drive the corn deep - processing industry chain.
Upstream in the industry chain, as the main raw material for fuel ethanol production, the demand for corn will increase significantly.
To ensure production, enterprises will step up their procurement of corn, purchasing large quantities of corn from farmers, grain purchasers, and other channels. This will drive up the price of corn, thereby stimulating farmers to increase their planting areas.
In the middle of the industry chain, corn deep - processing enterprises will face development opportunities. Enterprises may increase their investment in production equipment and improve production efficiency to meet the market demand for fuel ethanol and other corn - deep - processed products.
In 2025, driven by both tight global supply and the boost in fuel ethanol demand, the domestic corn planting and processing sectors are expected to embrace new development opportunities. However, in this process, they also face many challenges such as fluctuations in international market prices and unstable raw material supply. It requires the joint efforts of the government, enterprises, and farmers to achieve the sustainable development of the industry.
In the face of this situation, our suggestions for enterprises' coping strategies are as follows:
At the planting end, prioritize the layout of corn varieties with high yield per unit area and strong stress resistance to hedge against climate risks.
At the processing end, lock in long - term raw material costs through futures hedging, and simultaneously explore the diversification of non - grain ethanol raw materials such as cassava and cellulose.
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