China: Corn Price and Acreage Analysis
Talk to our team about AgFlow's offering →
Reading time: 2 minutes
In the first half of 2023, Corn prices fell and then rose in China. Before May, the price fluctuations were small. After May, traders’ willingness to raise prices increased as the market surplus continued to decrease. Price volatility has increased significantly. As of the end of June, Corn in North China has hit a new high in 2023, and the national average price of Corn is close to the year’s high point. In 2022, affected by the country’s overall regulation, Corn’s planting area and yield declined, but the planting area increased in 2023.
Wheat becomes a key factor in adjusting the supply of Corn. In the medium and long term, considering substitution factors such as wheat substitution, imported grains, and rice auctions, the current judgment of “there is a gap between production and demand, but no gap between supply and demand” is still maintained, but the gap between production and demand is gradually narrowing.
In the first half of 2023, Dalian Corn futures showed a shock-fall-rise trend. As of June 30, the settlement price of the leading Corn contract in Dalian was 2,726 yuan/ton, a decrease of 104 yuan/ton, or 3.67%, from January 3, 2023. From a fundamental point of view, domestic spot stocks fell in the first half of the year and then rose. In the early stage, traders’ mentality was weak, shipments were more active, market supply increased, downstream demand was weak, and digestion capacity could not keep up.
According to the data monitoring of the Mysteel agricultural products network, in January, the north and south ports had favorable prices, and the spot profit was 10-30 yuan/ton. In February, the spot profit turned negative. The inversion widened from the end of April to the middle of May, and the spot profit was – from 100 yuan/ton to 150 yuan/ton; the inversion began to narrow in late May, and spot profit at the end of June was – 30 yuan/ton.
First, in the first half of the year, the surplus grain at the grassroots level in the production area continued to decrease, and farmers were reluctant to sell. The arrival cost of Corn in Nangang was high, but the downstream demand was weak, and the rapid decline in wheat drove the Corn futures market to continue to decline.
The overall market performance is oversupply, Nangang quotations have fallen repeatedly, and spot profits continue to be inverted. Secondly, Nangang Corn-related substitute grains are sufficient, and the price advantage is obvious. Feed companies purchase barley, domestic wheat, malt, imported Corn, and other substitutes in a moderate amount, crowding out the domestic Corn market. However, after the end of May, the spot supply in the north and south ports was tight, and feed companies had a periodic demand for stock replenishment. The positive supply and demand side boosted the continuous rise of Corn prices, and the inversion range began to shrink.
According to AgFlow data, China imported 3 million tons of Corn from Brazil in July – August 2023, followed by the US (0.2 million tons).
Trend Analysis on Chinese Corn Acreage
The change in China’s Corn planting area follows the changes in the supply and demand environment of the domestic Corn market. Since 2004, the Corn planting area has been showing an upward trend. In 2008, the temporary storage Corn purchase policy was implemented, and the increase in Corn planting area was more prominent. In 2015, the planting area reached the highest level, and the Corn planting area achieved 12 consecutive increases. After that, China began to reform the temporary storage policy. In 2020, the planting area has declined for five consecutive years. In 2021, the planting area resumed growth.
“Two Stability and Two Expansion” and vigorous implementation of soybean and oilseed production capacity improvement projects have caused the Corn planting area to decline again. The Corn planting area in 2022 was 603 million acres, a decrease of 0.8% from 2021.
Try AgFlow Free
Access Free On Updates for Corn, Wheat, Soybean,
Barley, and Sunflower Oil.
No Credit Card Required & Unlimited Access In Time
