Market: July Corn Prices in the Production and Consumption Areas Saw Different Growths and Declines, and the Overall Prices were Less than Last Month

In July, the demand was weak, but corn was in an abundant supply, the transaction rate of temporarily-stored corn continued to go down, and the premium was decreasing, dragging down the trend of corn market prices. In July, corn prices in the production and consumption areas saw different declines and growths, but the overall prices were less than last month. The average price was RMB 1,965/MT, down 0.3% or RMB 5/MT less than last month.   
 
Production: 2019 Corn Output Would be 250 Million MT, down 3.0% from 2018
In July, in most areas of northeast and Huang-Huai and north China, the overall hydrothermal condition situation was relatively good, the temperature was relatively high, and soil moisture was suitable, which are good for corn growth. This month, the predication on the average yield of corn was adjusted up and was down 1% from last year. However, corn planting areas in 2019 would be down 2% from last year. So, BOABC predicted 2019 corn output would be 250 million MT, with a decline of 3.0% or 7 million MT from year on year.   
 
Further Processing: The Loss of Processing Increased, and the Operating Rate Went Down
In July, owing to a weak demand, the prices of corn further processed products were on a weak run; besides, soybean meal prices fell, driving down protein feed prices. So, further processing companies such as corn starch and alcohol sectors all fell into loss, and the profits were less than last month.
 
In July, more and more further processing companies stopped production for an overhaul, and the average operating rate descended month on month. Of which the average operating rate of corn starch and alcohol processing sectors was 58.0% and 55.3%, 9.0 percentage points and 6.5 percentage points less than last month.
 
Farming & Feed: Livestock/Poultry Farming Margins Improved, and the Gross Profits of Feed Processing Increased
In July, hog, broiler and layer farming margins improved. Of which, owing to a less supply, hog purchase prices continued to go up and farming margins ascended; broiler purchase prices didn’t improve, but the costs of chicks descended obviously, so the loss of broiler farming narrowed; along with the stocking-up of moon cake before the Mid-Autumn Festival, egg prices ascended, and layer farming margins improved.    
 
In July, the costs of main feed materials such as corn and soybean meal fell, but feed prices increased, so the gross profits of feed production improved. The gross profits of feed processing for growing-finishing pigs, broilers and layers reached RMB 203/MT, RMB 289/MT and RMB 287/MT, with a month-on-month increase of RMB 60/MT, RMB 69/MT and RMB 61/MT respectively; the gross profit margin was 7.4%, 10.3% and 9.0%, 2.3 percentage points, 2.6 percentage points and 2.6 percentage points higher than those of last month.