There is Big Difficulty in Releasing Subsidy Policy for Corn Further Processing

By CnAgri2017-11-24 09:49:16 Print After new-season corn availability on the market, the markets generally think the subsidy policy for corn further processing companies would continue but the subsidies would decrease. But BOABC thinks it is less likely to publish the subsidy policy for corn further processing companies on a large scale. The main reasons are as follows:
 
Recently, the State Bureau of Grain said when corn prices decreased to a certain degree, prearranged planning of corn subsidies for further processing companies would appear. Based on BOABC’s analysis, it was less likely that corn prices in the producing and consumption areas would go down greatly.     
 
First, corn further processing margins are relatively good and the operating rate maintains at a high level. During the week of November 13^th-17th, alcohol processing margins in the main producing areas hit the highest in the last five years, and along with the whole starch further processing sector making a profit, the operating rate approached to nearly 80%.   
 
Second, continuous subsidy support not only would increase financial pressure, but also would send wrong signals to the market. After loosening the limitations on access to corn further processing sector, newly-built and expanded or renovated projects emerge in large quantities, however, continuous subsidy support to further processing companies must lead to blind expansion of corn capacity and further bring the problems of overcapacity, fierce and cutthroat competitiveness, disturbing normal industry orders.