China and the US Reached the First Stage of a Trade Agreement, and Corn Spot Prices in China Possibly Would Go down after the Chinese New Yea

On December 13^th, China and the US announced to reach the first stage, which would be officially signed in January 2020. China would increase the imports of grain (corn and sorghum) and other grain byproducts from the US, which is one of important requirements in the negotiations between China and the US. Meanwhile, in the long term, the output of grain such as corn and sorghum in China is less than the demand, which needs some imports. At the first stage of a trade agreement, China possibly would cancel the extra tariffs on grain imports from the US.
 
Under the situation of a 25% tariff, American corn import costs arrival at Chinese southern ports are around RMB 2,200-2,300/MT, higher than settlement prices at current ports. Once the extra tariffs are cancelled, the import costs will decrease to RMB 1,800/MT, which increases competitiveness greatly. So, after signing agreement, China would increase corn imports from the US obviously.   
 
After new-season grain availability on the market this year, the progress of corn sales in the main production areas of north kept decreasing year on year. Besides, along with the coming of Chinese New Year, the transportation capacity is strained and overloading in road transport is strictly examined, which reduces the supply of corn and increases corn costs. After the Chinese New Year, the peak of corn availability on the market would come.
 
After the Chines New Year, owing to a weak demand and an increase in corn availability on the market, import costs would go down and the imports will increase, so corn prices in China possibly would lower.