Corn has been rebounding and rising for nearly half a month now.
Shandong's deep-processing plants have been raising prices every day because arrivals have remained low, leaving companies no chance to push prices down.
In Northeast China, prices have neither risen nor fallen noticeably. They have basically remained stuck, with neither side making the first move.
And on the 10th day of the 27th month, someone finally made the first move—not the deep-processing sector, but the northern ports.
Jinzhou Port's latest purchase price for new-season corn was posted at 2140-2150 yuan/ton, down 10 yuan from the previous day.
Some might think that a drop of 10 yuan is nothing unusual, right?
Indeed, 10 yuan is not much, but the point is not the amount of 10 yuan; it is the sharp increase in volume at the northern ports.
The number of trucks arriving at Jinzhou Port by road reached 673, equivalent to more than 4 ten thousand tons of grain—320 more trucks than in the previous day and night.
So the question is: why has the volume suddenly surged?
First, let’s look at the current situation at the northern ports.
Corn inventories at the four northern ports have reached 219.5 ten thousand tons, up 32.4 ten thousand tons in one week. Inventories have risen for the 4th consecutive week, reaching their highest level for this time of year in recent years.
In a word, ports are not short of grain.
What was the situation in Northeast China before?
Farmers were holding back sales, and weather was also a factor. Not only did grain not flow out, but local circulation also slowed, so corn arrivals were low.
But we also analyzed this before: low corn arrivals do not mean there is no grain. Supply pressure is not only present but also considerable; the entire market is holding its breath.
The sudden sharp increase in volume in North Port can only mean two things:
First, they can’t hold out any longer.
There’s a difference between holding back sales and holding back sales. Some do so because they’re bullish on corn and believe the market will improve later, so they hold back sales. Others do so because corn has fallen too sharply, below their cost line, so they hold back sales.
Corn is clearly the latter.
This also means that although grain holders are reluctant to sell, their expectations for corn are not high. So after prices were raised continuously at the northern ports, they were eager to sell their grain.
Second, supply pressure is too great.
This is also quite obvious. Since Northeast corn came onto the market, prices have fallen all the way, but basically not much of it has flowed out.
On the one hand, prices are also falling in Shandong and North China, so the prices are not aligned, and no one is willing to do business at a loss.
On the other hand, demand is weak and hog prices have fallen to rock bottom, so feed companies are even less willing to stockpile grain.
So most of the selling pressure on corn in Northeast China has not disappeared; it has just kept being pushed back due to factors such as the weather.
Pressure, once it exists, needs to find an outlet and be released; otherwise, sooner or later, things will collapse.
But Northeast China’s corn cannot flow out at a competitive price, and with that outlet blocked, it can only seek an outlet locally.
The first outlet is processing.
In recent days, deep-processing quotations in Northeast China have been virtually unchanged across the board.
COFCO Gongzhuling2080, Yushu2100, Longjiang Fufeng2040, and Inner Mongolia Yipin2090，27 have largely kept prices unchanged today, with scattered increases and decreases. Overall, the market is in a state of gradual decline on low trading volume.
This also shows that companies are relaxed and not at all worried about being unable to procure grain. Naturally, they will not raise prices to secure grain, so deep processing is basically not a viable option either.
Then there was only one other route: the port. On top of that, the port had just raised its prices a couple of days earlier, so a huge amount of corn was sent to the port.
This is also an important sign of corn pressure spilling over to the port.
With more trucks and more grain, the port naturally has to lower its prices too.
But as mentioned earlier, a price drop is no big deal; it happens all the time. The real problem is that no one is taking the grain at the port.
Looking at the lock-up area, there has been no movement at the southern ports—not only have prices remained unchanged, but stocks have also continued to build.
This is a real killer.
That means local supply is already close to reaching its limit, so it is starting to push outward. But demand is standing still and not reaching out, so the pressure is being transmitted inward again. This is what is most worrying about prices falling at the northern ports.
But looking at the market, corn in Northeast China has not fallen sharply.
The fact that prices have not plunged does not mean the pressure is light. It is mainly being supported by 2 things:
One is the weather.
A new round of sharp cooling has begun in Northeast China over the past few days. Rain and snow have returned, giving damp grain another chance to ease.
The other is sentiment.
Besides the weather, sentiment has also been supported by China Grain Reserves Group opening its purchasing at scale in Northeast China.
Together, these two factors have kept Northeast China’s corn prices from falling further.
But things get difficult again from here: will sellers continue to hold back, or sell grain in large quantities?
Both are possible. Which way things go depends on sentiment and the weather—and those are precisely the two hardest things to predict.
So corn is likely to remain at an impasse in the short term, but sooner or later there will be a major shift.