According to the Commodity Analysis System of SunSirs, looking at the overall trend of domestic corn prices throughout the year, the domestic corn prices in 2023 have fluctuated from high to low. Compared with previous corn prices, the domestic corn prices in 2023 have fluctuated significantly. In the second half of the year, corn prices quickly fell to the level of 2,500 RMB/ton and then fluctuated weakly. On January 1, 2023, the average price of third class yellow corn was 2,830.00 RMB/ton, and on December 29, the average price was 2,488.57 RMB/ton, a decrease of 12.06% for the year.

Review of corn market in 2023

After New Year's Day, frequent rainy and snowy weather in the production areas affected logistics transportation. In addition, farmers in the production areas stopped selling grain at the end of the year, resulting in a significant decrease in the domestic corn market trade volume. To stimulate the arrival of goods, ports and deep processing enterprises slightly increased prices to replenish inventory, supporting the strong domestic corn market prices before the year. During the Spring Festival, the domestic corn market trade completely stopped, and the overall price of corn remained stable and moving forward.

After the holiday, the domestic corn market trade gradually recovered, imported corn continued to arrive at the port, and the corn market volume in the production area continued to increase. Downstream trading entities had a strong wait-and-see attitude, and the overall pressure on the domestic corn market prices was weak. During this period, the supply and demand game in the domestic corn market continued to intensify, and the supply and demand sides of the market pulled back multiple times. Trading entities were reluctant to sell and support prices, but were unable to be suppressed by the loose supply of the corn market, The domestic corn market prices continued to fluctuate weakly from February to April. On April 30th, the average price of corn in the domestic market was 2,730.00 RMB/ton, a decrease of 3.53% compared to the beginning of the year.

Entering May, the continued weakness of corn prices has led to reluctance among grain trading entities to sell and raise prices. The arrival volume of corn by ports and deep processing enterprises has continued to decline. In order to stimulate downstream enterprises to continuously raise corn purchase prices, and at the same time, the rebound in domestic wheat market prices has also provided some support for domestic corn market prices. In mid May, the overall decline in domestic corn market prices stabilized and then slightly rebounded. In June, there were frequent high temperatures and rainy weather in China, which made it more difficult to transport grain. Many trading entities turned their attention to the purchase of new wheat. The domestic corn market trade volume continued to decline, and the available grain sources gradually decreased. The arrival volume of corn from ports and downstream deep processing enterprises continued to be low. In addition, the expectation of global corn production reduction increased, and grain trading entities were hesitant to sell and raise prices. Enterprises continued to raise prices to replenish inventory, and the domestic corn market prices continued to rise.

Starting from mid July, in order to ensure market supply, the amount of policy corn investment has increased, and grain trading entities have successively cashed out. The domestic corn market supply has slightly rebounded, and the tight supply situation in the corn market has been somewhat alleviated. Ports and deep processing enterprises have slightly lowered the corn purchase price, and the overall domestic corn market price has slightly declined. Supported by the decreasing amount of high-quality and tradable surplus grain, the overall domestic corn price at the end of the month was weak and stabilized, and then fluctuated slightly.

The typhoon caused a large amount of rainfall in the north, leading to a decline in domestic corn production expectations. At the same time, the early spring corn market was hindered, and the price of wheat in Linchi rose significantly. The first round of targeted rice auctions saw a significant premium, and grain trading entities once again hesitated to sell and raise prices. The arrival volume of corn from ports and downstream deep processing enterprises decreased significantly. In addition, the breeding industry market improved, and the demand for corn feed slightly rebounded. Enterprises raised prices to replenish their inventory, supported by many positive factors, In August, the domestic corn market prices fluctuated upwards.

In September, the supply-demand game in the domestic corn market continued to intensify, and the overall corn market prices were relatively high and consolidating. In mid September, spring corn in North China and other regions was gradually listed, and the willingness of grain trading entities to sell out increased. At the same time, downstream deep processing enterprises had relatively sufficient corn inventory and procurement was more cautious. The domestic corn market supply slightly rebounded, and manufacturers continued to lower corn purchase prices, causing domestic corn market prices to rise and fall slightly. At the end of September, corn was listed in some regions of Northeast China, and the overall expectation of abundant autumn grain production was relatively high. Trading entities continued to be bearish on the future market, and the overall price of domestic corn market opened high and closed low. The price of domestic corn market continued to be weak and downward.

With the gradual increase in the market volume of corn in the Northeast production area, the domestic corn market is seamlessly connected with the new and old, and the new season corn harvest has become a foregone conclusion. Downstream trading entities have a strong wait-and-see attitude, and manufacturers have gradually lowered their corn purchase prices after completing the acquisition task. The overall domestic corn market has entered a stage of strong supply and weak demand, and the overall pressure on corn market prices in October has come to a comprehensive decline. The snowfall in many production areas in November has to some extent eased the downward trend of domestic corn prices. With the gradual improvement of weather, the domestic corn market continues to increase, the downstream demand for animal husbandry continues to be sluggish, imported corn and its substitutes continue to arrive in Hong Kong, and the overall supply of domestic corn market has entered a situation of strong supply and weak demand. The overall price of corn market is under pressure and fluctuates weakly. On December 29th, the domestic corn price fell to 2,488.57 RMB/ton, Compared to the early stage of corn listing (September 1st, 2,832.86 RMB/ton), the price of domestic corn has dropped by 12.15%, and it has dropped to the level of early 2021.

Throughout the year 2023, the overall focus of domestic corn futures market has shifted downwards, with weak stocking in the middle and lower reaches throughout the year. From the beginning of the year to March, the domestic corn market engaged in a long short game, and the corn futures market fluctuated at high levels. From late March to mid May, under the suppression of many bearish factors, the market for corn futures continued to decline. From mid May to late August, trading entities were reluctant to sell at high prices, and deep processing increased prices to replenish inventory. The overall supply of the corn market was tight, and traders' inventories declined year-on-year. Domestic corn futures were generally volatile and strong. Entering September, with the listing of new grains in production areas, the domestic corn market supply has gradually loosened, and terminal demand has continued to be weak. Under the pressure of strong market supply and weak demand, corn futures have continued to decline under pressure.

Analysis of Factors Influencing Corn Prices

After the cancellation of the national corn storage policy, the domestic corn market prices are mainly affected by various factors. Production costs have a strong support for the formation of the bottom of the domestic corn market prices, while seed and fertilizer prices continue to be high, and labor costs are rising year by year. These factors will provide strong support for the bottom of the domestic corn market prices in 2024. Due to the suppression of the rising and falling domestic corn prices in 2023, the profit point of corn cultivation has significantly decreased. In 2024, the enthusiasm of farmers in the production area for corn cultivation will decrease, and the cost of corn cultivation is expected to stabilize. The upward trend of planting costs will slow down, and the impact of planting costs on domestic corn prices in 2024 will be weakened.

In 2023, the global supply of major grains is relatively abundant. In 2023/2024, most of the world's major corn exporting countries have achieved varying degrees of increase in production, with a total global corn production of 1.222 billion tons, a year-on-year increase of 64.83 million tons. The global corn supply continues to increase, and international corn prices will continue to be under pressure. The overall domestic corn production is abundant, and the overall domestic corn supply is sufficient, which will further suppress the domestic corn market prices in 2024.

The import and export of corn and its substitutes will also have a certain impact on the domestic corn market prices. From January to November 2023, the cumulative import volume of corn in China was 22.181 million tons, a year-on-year increase of 12.29%; The cumulative import volume of Chinese sorghum was 4.866 million tons, a year-on-year decrease of 51.51%; The import volume of wheat products was 11.493 million tons, a year-on-year increase of 29.43%; The import volume of rice products was 2.401 million tons, a year-on-year decrease of 58.43%; The import volume of barley products was 9.667 million tons, a year-on-year increase of 82.95%; The import volume of oat products was 445,000 tons, a year-on-year increase of 19.85%. The import volume of grains is showing an increasing trend compared to 2022, and a large number of low-priced corn and its substitutes entering the domestic market will not only fill the gap in domestic grain production and sales, but also exert certain pressure on the domestic corn market price.

Supported by the continuous increase in planting area and the continuous increase in yield per unit area, domestic corn production will continue to be abundant in 2023. According to data from the Ministry of Agriculture and Rural Affairs, the domestic corn production in 2023 was 288 million tons, a year-on-year increase of 4%. The corn production has been abundant for years, and with the issuance of genetically modified corn production licenses, there is no reduction in the expectation of further increase in domestic corn production in the future. The supply of corn in the market will continue to be loose.

In 2023, domestic egg prices fluctuated and fell by 5.79% within the year, while pig prices fluctuated and fell by 18.62% within the year. The breeding industry continued to operate at a low level throughout the year, with most of the year in a loss making situation. The enthusiasm of farmers to replenish their pens continued to be sluggish, and the overall recovery space for corn feed demand in the future is limited. Overall, the current domestic pig inventory is still at a relatively high level, with a stable overall stock of sows capable of breeding. The breeding industry continues to operate at a low level, and the corn feed demand will continue to remain stable in 2024.

SunSirs corn product analyst believes that in 2021, domestic corn prices rose and fell, while in 2022, the overall high volatility of domestic corn prices was relatively strong. In 2023, domestic corn prices fluctuated widely, and continued to decline significantly in the second half of the year. Currently, the overall domestic corn market prices have fallen to the level at the end of 2020. Affected by the increase in soybean subsidies and a significant decrease in corn planting profits, it is expected that the domestic corn planting area will decrease in 2024, and the overall corn production will continue to maintain a high level. The domestic corn market supply will be overall sufficient in 2024.

In 2023, the overall prices of eggs and live pigs in China have fluctuated downward, and the profit margin for breeding has remained low. Due to the continuous increase in domestic scale, the current domestic pig inventory is relatively stable, and the overall demand for corn feed in China will remain stable in 2024. In 2024, the domestic demand for corn starch will remain stable at the level of 2023, and downstream demand for deep processing will remain stable. The international food prices have fallen, and the arrival of a large amount of imported corn and its substitutes in port will also exert certain pressure on the domestic corn market prices. Domestic corn production has been high for consecutive years, and downstream demand has remained stable throughout the year. Under the pressure of strong supply and weak demand in the corn market, the overall price of domestic corn in 2024 is weak and difficult to improve.

As the end of the year approaches, farmers in the production area have increased their intention to sell grain for cash. In addition, imported corn continues to arrive at the port, and downstream deep processing enterprises have relatively sufficient corn inventory. It is expected that there will still be some room for domestic corn market prices to fall before and after the Spring Festival. After the Spring Festival, there will be a peak in the production of corn in the Northeast region. In the first quarter, the domestic corn market supply will continue to be loose, and the domestic corn market prices will continue to operate steadily with a weak trend. With the decrease of circulating high-quality surplus grain in the domestic corn market, the domestic corn market prices in the second quarter will receive certain support. The new season corn will be launched in the third quarter, and the overall domestic corn market prices will once again enter a seasonal decline channel. The domestic corn market price for the whole year will fluctuate in the range of 2,300-2,600 RMB/ton.

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