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Entering June, Corn Prices Possibly Would Stop Increasing

China Agriculture Report By CnAgri2017-06-13 09:34:08China Agriculture Report Print

Supported by the subsidy policy for northeastern further processing and feed companies, the progress of corn purchase in the producing areas was being sped up and corn prices had increased for consecutive three months. But, after June, corn prices possibly would stop increasing. The main reasons are as the followings:

(1)The demand for corn would drop. Along with temperature ascending, the demand for livestock and poultry products enters off season and purchase prices dropped. At present, meat and egg poultry farming generally falls into loss; although hog farming makes a profit, yet it is decreasing, and the demand for corn from farming sector shows the decreasing trend; and meanwhile, owing to decreasing margins, especially in Huang Huai Region of north China where there are no subsidies, starch and alcohol processing fell into loss and further processing companies would enter the period of a routine overhaul, besides the subsides in the northeast would expire at the end of June, so the operating rate would decrease.

(2)Corn auction is continuing. Along with the continuing of temporarily-stored corn auction, auction volume every week has increased to nearly 5 million MT, which changes the expectation on a tight supply of corn. In June, the transaction rate of temporarily-stored corn auctions would drop and the scope of premium would narrow.

(3) Corn supply in Huang Huai Region of north China would go up. In June, wheat in Huang Huai Region of north China would enter the harvest period and some traders would sell corn in large quantities in order to make room for what, which periodically push up corn availability on the market.


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