After the Subsidies Expire, Further Processed Products’ Prices Possibly Will Ascend

By CnAgri2017-07-03 11:23:24 Print

After June 30th, the subsidies to northeastern further processing companies would expire. After the subsidies are due, the prices of corn further processed products such as corn starch and alcohol possibly will ascend. The main reasons are as the followings:

(1) Corn costs of further processing companies will ascend. Corn stocks of northeastern further processing companies purchased before the end of April are almost consumed, and they will depend on auctioned or commercial corn; although since auction of temporarily-stored corn, the growth in corn prices has slowed down, yet the average cost still was gradually increasing. The cancellation means an increase in corn costs, and the companies must raise the prices of their products.

(2) The operating rate of further processing companies will go down. After the cancellation of subsidies to northeastern further processing companies, processing margins drops, absolutely resulting in a drop in operating rate of some companies; and meanwhile, due to a strict check-up of environmental protection in Shandong and Hebei, some local further processing companies have entered the period of an overhaul in advance, and further processed products such as corn starch and alcohol also will see a drop in supply.

(3) The demand for some further processed products enters busy season. The demand for starch sugar enters busy season, driving up the demand for corn starch; besides, corn starch exports are relatively good, so the companies are more willing to raise their prices.