The Restart of the Temporary Reserve Corn Auction Will Consolidate the Bottom of the Corn Price in Northeast China

On December 11, the auction of temporary storage corn restarted, and Jilin invested 565,000 tons of 2015 corn for targeted sales to corn deep processing enterprises.  The auction has brought pressure to the regional corn market, but BOABC does not expect the auction to turn the corn price down, but to consolidate the bottom price in the recent stage.
 
First of all, deep processing enterprises are in the traditional stocking stage recently, so there is sufficient demand in the corn market. December is the peak for new corn listed in the northern production areas, and large deep processing companies in the northeast have habitually stocked up raw materials for 2 months or even higher. The deep processing of this year in the northeast has been put into operation one after another. The Jilin corn auction sold 563,000 tons, with a transaction rate of 99.7%, indicating that the recent acquisition of deep-processed corn is still steady.
 
Moreover, the temporary reserve auction price will not drop below the market price.  The average transaction price of the temporary storage auction is 2310 yuan/ton, a premium of 42 yuan/ton, plus nearly 100 yuan of discount and shortfall fees. The price of temporarily reserved corn to factories has no apparent difference with the pending auction price of the current deep processing enterprises.
 
Lastly, the auction quantity of temporary storage corn is relatively limited, and it is expected that it will take a long time to enter the link of consumption.
 
Therefore, the release of temporary storage corn has indicated the government's attitude of suppressing the frenzied increase in corn. It is one of the measures including imported grains and the release of temporary storage of rice and wheat. It will consolidate the bottom of the corn price, but in expectation, it will not drive the corn price obviously going down.