National corn prices continued to decline in the third quarter, mainly due to ample supply and shrinking demand, with market supply and demand remaining loose. In the fourth quarter, as the volume of new grain entering the market increases and carryover inventories rise year over year, market supply will increase seasonally. However, downstream demand is growing slowly, making it difficult to change the loose supply-demand situation. Corn prices are expected to have further room to fall, although farmers’ reluctance to sell may drive a brief rebound during this period. Pay close attention to the effects of weather, policy, and other factors.
National corn prices continued to decline in the third quarter
The third quarter is a transition period between old and new crops. With large carryover inventories and farmers in production areas actively selling new grain, corn supply was ample, while demand fell to a seasonal low. Supply and demand became looser, and domestic corn prices continued the downward trend from the second quarter, with the decline accelerating in 9 month. Monitoring data from Zhuochuang Information show that the national average daily corn price fell from 2241 yuan/ton to 2158 yuan/ton in 9 month, a decrease of 3.70%; the monthly average price was 2241 yuan/ton, down 1.50% month over month and 4.13% year over year. The national average corn price in the third quarter was 2241 yuan/ton, down 3% from the second quarter and 3.42% year over year.
In the fourth quarter, new grain from producing regions will come onto the market in concentrated volumes, and supply will drive market prices.
Seasonal indices are a commonly used method for forecasting commodity prices. They can be used to assess month-on-month price changes, while comparing the number of years with price increases against the number of years with decreases can indicate the probability of a price rise or fall. Historical data from the past 15 years show that the seasonal index for the national average corn price in 10 is below 100%, and the number of years with declines is significantly greater than the number of years with increases. On this basis, the national average monthly corn price is expected to decline month on month in 10 this year, with the decrease widening.
As shown in the chart, the seasonal index for the average corn price in 10 falls to its lowest level of the year. This is a seasonal pattern, primarily caused by the concentrated supply of newly harvested grain. According to research by Zhuochuang Information, by mid-10, new grain continued to come onto the market in North China and Northeast China, while mechanically harvested grain in eastern Heilongjiang had not yet entered the market in concentrated volumes. New grain supplies from producing regions are expected to increase in 10, and grain stored in outdoor stacks at the grassroots level in Northeast China is expected to enter the market gradually in 11. Overall, market supply is expected to become more ample in the fourth quarter.
In the fourth quarter, downstream demand for corn is expected to increase, but most processors are controlling procurement costs.
As the largest downstream corn-consuming sector, feed use is expected to see a seasonal recovery and increase in the fourth quarter. First, as temperatures fall, feed intake by livestock and poultry will return to normal levels, benefiting feed consumption. Second, the fourth quarter is traditionally a peak season for meat consumption. The slaughter weight of livestock and poultry will increase, which will also boost feed consumption. Finally, as the post-ripening period for the new-season corn crop ends and its price advantage becomes clear, the proportion of corn in compound feed production will rise significantly, directly driving up demand for corn for feed use. Recent data show that corn accounted for an average of 29% of compound feed in the third quarter, rising to around 39% in the fourth quarter, an increase of 10 percentage points. At present, as the price of new-season corn has fallen to a recent low, wheat’s substitution advantage has weakened. New-season corn consumption in regional destination markets is expected to rise to a relatively high level for the year in the fourth quarter, providing some support for corn prices.
The seasonal increase in operating rates at deep-processing enterprises in the fourth quarter will support additional corn consumption. In 10 month, downstream deep-processing enterprises will enter the new year and many will actively purchase low-cost newly harvested corn. Operating rates at deep-processing enterprises will gradually rise in the fourth quarter, reaching a relatively high level for the year. Data monitored by SunSirs show that the monthly average operating rate of the corn deep-processing industry in the fourth quarter of 2022-2025 rose from 37% to 41%, an increase of 4 percentage points in total; the average operating rate in the fourth quarter was 39%, up 3 percentage points from the third quarter. Operating rates at deep-processing enterprises are expected to follow their seasonal pattern in the fourth quarter of this year, with corn purchases increasing temporarily. However, enterprises will generally control procurement costs to ensure production profits.
National corn prices are expected to remain at seasonally low levels in the fourth quarter
Based on the seasonal supply and demand patterns in China’s corn market, both supply and demand are expected to increase in the fourth quarter. Combined with continued releases of policy grain to supplement supply, demand growth is expected to fall short of supply growth. Market supply and demand are therefore expected to be loose, and national corn prices are expected to decline seasonally.
By month, since 10 is a period when new-crop corn is supplied to the market in concentrated volumes, the supply side is expected to dominate the market. The national average corn price is expected to fall to around 2135 yuan/ton, down 70 yuan/ton month on month. In 11, as temperatures fall, storage conditions for corn improve in the middle and latter part of the month, and corn prices drop to around the planting cost line (including land rent), there will be a gap in the availability of mechanically harvested grain and corn stored in stacks in Northeast producing regions. Farmers at the primary level are likely to become more reluctant to sell, and prices may rebound briefly. However, market prices will have fully transitioned to new-crop grain, bringing down the national monthly average price, which may fall to 2125 yuan/ton, down around 10 yuan/ton month on month. In 12, the drivers of rising corn prices will still be slower growth in supply due to farmers at the primary level being reluctant to sell, as well as increased downstream feed demand. If farmers at the primary level sell grain as usual, the monthly average price may still fall. Pay close attention to weather, policy changes, and farmers' willingness to sell grain.