Corn’s movement over the past few days has got many people feeling optimistic again.
Prices are still rising in Shandong. Zhucheng Xingmao and Zhucheng Yuanfa raised their prices by 5 li on the 25 day, bringing them to 1.125 yuan per jin. Yishui Dadi and Binzhou Jinhui followed suit. Prices have now been moving up for several days in a row.
In the Northeast, the price rally has slowed, but prices have not actually fallen either. Farmgate quotes in Heilongjiang are still holding firm.
More importantly, the much-anticipated “a warm-up in the weather will trigger a sharp rebound in arrivals” that everyone had been waiting for over the past few days simply never happened.
What is even more puzzling is that arrivals at Shandong’s deep-processing plants have picked up somewhat, but nowhere near enough to drive prices down.
So the corn market is getting harder and harder to understand.
But actually, it’s not that complicated.
Clearly, besides the weather, reluctance to sell also contributed to this wave of price increases.
On the surface, the weather was behind this round of price increases.
A few days ago, many parts of the country saw lower temperatures and rain, disrupting transportation and sharply reducing the volume arriving at mills. At one point, it fell from more than a thousand vehicles to just over a hundred.
With no grain arriving at their doors, businesses could only raise prices to encourage deliveries.
But another reason behind the weather was farmers holding back sales.
The rain stopped, but the volume did not surge; it edged up little by little, from over 100 to over 400 vehicles. The volume did not rise sharply, which shows that the cause was no longer the weather, but grain holders holding back sales.
The situation in Northeast China is consistent with this as well.
According to a grain trader in Zhaozhou, Daqing, Heilongjiang, local corn prices are firm, farmers are relatively reluctant to sell, and trade in dry corn is sluggish.
In particular, Sinograin’s expanded purchasing points have given local farmers more confidence. And with the rain and snow and dropping temperatures, farmers are in less of a hurry to sell their damp grain and are keeping it at home.
But it is hard to say how long they can hold back from selling.
Because holding back sales is only an emotional response; it does not mean there is no grain left.
This is a bumper harvest year, and new grain from Northeast and North China is coming onto the market in concentrated volumes. Not a single kernel of this additional corn harvest has gone missing; it has simply shifted from “in a hurry to sell” to “wait a little longer,” remaining in farmers’ hands and being stockpiled at collection points and in yards.
Withholding sales depends on two things: confidence in prices and the ability to store grain.
Confidence is the easiest thing to change.
Everyone is pulling together now because prices are rising and the treasury is taking in revenue. But one day, if there are more vehicles, quotes ease, or people urgently need cash, they may not be able to hold on. If prices drop, the ranks of those holding back from selling could dissolve in an instant.
The more prices rise, the less people sell; when prices fall, they rush to sell. This has played out repeatedly over the past few years.
As for the conditions for storing grain, those are even more beyond people’s control; they depend on the weather.
The expected major increase in supply from Northeast China did not materialize for one reason: the weather changed again.
Over the past couple of days, temperatures have dropped again in Heilongjiang and several other places, with rain and snow, successfully freezing the corn market once again.
But the pressure in Northeast China has not eased at all.
Corn inventories at the four northern ports were 219.5 ten thousand tons, surging 129% year on year. The theoretical profit margin on shipments from the south to the north is still inverted, and Northeast grain is not flowing out smoothly, leaving it stuck locally.
And this year is another bumper harvest. With so much grain harvested, everyone knows how much has actually been moved out.
Looking at the demand side, there has been no improvement at all.
Pork prices are still falling, the livestock industry continues to operate at a loss, and feed mills have only about 24 days' worth of corn in stock, buying it as needed.
So, the pressure on corn hasn’t disappeared; it has merely been pushed back.
Put all of this together, and it becomes clear: all the pressure on corn is now resting on the weather, which is the hardest thing to bet on.
As the saying goes, the weather is unpredictable, and no one can predict what the heavens have in store.
So we still can’t let our guard down when it comes to corn, and we must not take it lightly.