Since May 2016, China has canceled the purchase policy of corn for temporary
storage and stopped the purchase of 2015/16 corn. This year the corn purchase
volume has hit the high record of 125 million tonnes. Most of domestic
high-quality corn has been purchased by the state, leading to the consequent
gradual consumption of the extras in the market.
Source: Internet
Due to the tight supply in the
market, the domestic market price of corn rebounded and, according to CCM's
price monitoring, the price hit a low record on 13 April of USD271.82/t
(RMB1,791/t) and then rebounded to USD278.50/t (RMB1,835/t) on 7 June.
Meanwhile, some downstream enterprises raise the purchase price for more corn
as a response to the tight supply.
On 7 June, downstream enterprises in Shandong
Province raised the purchase price of corn (second grade) to
USD254.97/t-USD273.19/t (RMB1,680/t-RMB1,800/t), an average of USD20.79/t
(RMB137/t) higher than that in May.
Monthly market price of corn in China,
2014-2016
Source: CCM
Overstored corn auctions
As the corn surplus remains tight, China
officially initiated the directional selling of overstored corn on 13 May, 2016
with three auctions conducted so far:
-
3 June: transaction volume at 1.75 million
tonnes, transaction rate at 59.8%, average transaction price at USD238.73/t
(RMB1,573/t)
-
27 May: transaction volume at 864,960
tonnes, transaction rate at 44%, average transaction price at USD233.27/t
(RMB1,537/t)
-
13 May: transaction volume at 30,200
tonnes, transaction rate at 7.6%, average transaction price at USD200.64/t
(RMB1,322/t)
The overstored corn auctioned during these
dates has been harvested in 2012 and auctions were held by the State
Administration of Grain (SAG) at national grain trading centers in all
provinces (autonomous regions and municipalities).
Since the overstored corn is
of poor quality, the transaction rate was generally lower than 60%, in spite of
this, it is gradually becoming popular as it is harder and harder for
enterprises to purchase corn in the market. Therefore on 3 June, the SAG
announced its plan to increase another 1 million tonnes of corn for auction
(2.42 million tonnes before), totaling 3.42 million tonnes.
Auctions for alternative corn
Since 6 May, 2016, Jilin Province has
started to hold provincial auctions for alternative corn (each year, the stored
grain should be alternated, especially in the harvesting season, to ensure the
quality), totaling an amount of 288,400 tonnes of corn that was sold with an
average transaction price of USD246.02/t-USD258.31/t (RMB1,621/t-RMB1,702/t).
Most of the alternative corn has been harvested in 2012 and 2013, at second
grade and the transaction rate increased to 93.2% from 8.3%.
Details of auctions of alternative corn in
Jilin Province, 6 May-8 June, 2016
|
Time
|
Actual
transaction volume, tonne
|
Transaction
rate
|
Average
transaction price, USD/t
|
|
8
June
|
102,877
|
93.21%
|
258.31
|
|
24
May
|
90,250
|
75.61%
|
245.56
|
|
13
May
|
3,033
|
8.30%
|
250.42
|
|
6
May
|
7,796
|
23.45%
|
246.02
|
Source: Jilin Grain Wholesale Trade Center
Co., Ltd.
At the moment, the market supply of corn
remains tight and the market price is gradually climbing up. Both the market
and enterprises are waiting for the high-quality corn harvested in 2014 and
2015 to be put into the market.
Until the corn stockpile is released by the
Chinese government into the market, enterprises will keep increasing their
purchase price and thanks to this, the domestic market price will be boosted.
CCM predicts, however, that as soon as the inventories flow into the market,
the market price of corn will fall back without policy guidance.
This article comes from Corn Products China News 1606, CCM
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Tag: corn