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August Corn Prices Would Drop, but the Decline Won’t be Great

China Agriculture Report By CnAgri2017-08-23 09:51:44China Agriculture Report Print Along with the increasing of warehousing-out of temporarily-stored corn and the coming of new-crop corn availability on the southern market in small quantities, corn prices would finish the increasing trend and start to decrease after August. By August 11th, the average price of corn was RMB 1,745/MT, RMB 30/MT less than the high point at the end of July. But, it was predicted that August corn prices won’t decrease greatly. The main reasons are as the followings:
(1) By controlling the volume of auction volume and the speed of warehousing-out, temporarily-stored corn auction can effectively influence market price. Since August, the auction volume of temporarily-stored corn has shrank, from the average of 5 million MT/week in July down to 1.6 million MT this week; currently, 10 million MT of corn has not been warehoused out. Corn warehousing-out has been slowed down recently, relieving stress of corn supply.
(2)The demand for corn still would maintain at a high level. Corn further processing capacity ascended, and the operating rate increased obviously year on year; and meanwhile, along with the recovering of hog farming and busy season of feed consumption, feed and farming companies all have some demand for purchasing corn.
(3) Corn stocks have been in the process of decreasing, and the expectations from market players are changing. Guided by the policy, corn planting areas reduced, so the outcome of new-crop corn output in 2017 less than 2016 is definitely settled. Besides, corn consumption would be 13 million MT higher than corn output. Within the next several years, the trend of output less than demand would continue and corn stocks would be in the process of decreasing.

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