On 11/12, corn arrivals in Shandong still exceeded one thousand, and surged directly to 1500 truckloads. This was also the highest volume of arrivals in recent times.
This is the same old pattern. It should not really be anything new, but the problem is that these arrivals picked up rather suddenly.
Let's look back at arrivals over the past 4 days.
11 month 9 day, 130 cars.
11 month 10 day, 476 cars.
11 month 11 day, 1004 cars.
11 month 12 day, 1544 cars.
Good grief, in 4 days, the volume surged from 130 to over 1500, increasing by more than 11 times.
As soon as the volume picked up, all the previous gains were wiped out.
Of course, the risk in Shandong is not high now, so although prices have fallen, there is not much cause for concern.
But the Northeast is trembling with fear.
What are you shaking for?
Afraid of facing a situation like Shandong's.
Corn had been rising all the way before, but the gains felt shaky, because everyone knew that selling pressure on corn was still heavy. Moreover, this round of gains was not driven by demand; it was pushed up purely by reluctance to sell and help from the weather.
As we said before, weather and sentiment are both variables and are uncontrollable.
So when the weather clears up, a large volume can easily come onto the market; Shandong is a recent example.
Of course, Shandong does not face much risk, but the Northeast does.
First, grain sales in the Northeast are progressing slowly, creating significant selling pressure.
Overall, grain sales in the Northeast are only at 17%. Apart from Liaoning, where sales are progressing relatively quickly, all other regions are lagging, especially Jilin and Heilongjiang. These two regions also produce the most corn, so selling pressure is greatest there.
Although corn in Northeast China had been rising all along, the gains never felt reassuring. There was always the fear that one day the skies would suddenly clear and the snow would melt, making it impossible to store the corn and forcing a flood of supply onto the market.
If a huge volume of corn suddenly comes onto the market in Northeast China, the resulting drop will be no minor fluctuation. With the example of Shandong so close at hand, how can people not be worried?
Second, futures also suddenly fell.
The futures market had been quite firm, but starting yesterday, it suddenly plunged, falling below the important 2200 threshold.
Futures fell, and market sentiment was thrown into turmoil. Prices fell again today, but the decline narrowed somewhat. Even so, they still closed below 2200, and at their highest they could not get back to 2200.
This is a blow to sentiment.
As mentioned before, the weather and sentiment are both among the things most likely to change, so the Northeast corn market is now trembling with uncertainty.
Even more serious, some companies in the Northeast have already started cutting prices, and large companies are leading the way.
When corn prices in Northeast China rose before, large companies also led the rally. This time, they are leading the decline, which has left everyone feeling uneasy.
Oh, and prices at the northern ports, which had just risen a couple of days ago, have now fallen again.
In short, the corn market in Northeast China is now fraught with uncertainty.
There is really no need to panic. A decline is highly likely, and I think everyone is aware of that; the only question is how much prices will fall.
I don't think corn in Northeast China will fall to the point of collapse.
Why?
First, grain in Northeast China is not the same as grain in Shandong.
Grain in Shandong is grain that "must be sold," while grain in Northeast China is grain that "can wait"—the weather is cold, so the grain can be stored. Moreover, because of costs, grain holders are still quite reluctant to sell.
For example, when Beigang lowered prices today, the number of trucks delivering grain immediately fell. Prices down, volumes down—this indicates that at least market sentiment has not led to panic selling of grain.
Second, the weather is still favorable.
According to the forecast from the China Meteorological Administration, from 11 month 14, another strong cold air mass will affect most of central and eastern China, with temperatures dropping by 6 to 10 degrees. Some parts of Northeast China will see rain or snow.
The weather is still very favorable for corn in Northeast China.
Third, the reserve depot raised its purchase price.
Corn purchases at the reserve depot had frequently gone unsold at auction before. We said the price might have to be raised, and the purchase price was indeed raised on 12.
When purchasing corn in 11 month 2 at the Sinograin Heilongjiang Hulin Directly Affiliated Depot, the floor price was 2080 yuan/ton, but the corn went unsold at auction. On 11 month 12, it purchased corn again, raising the floor price to 2150 yuan/ton, but it still went unsold at auction.
When the Nehe Directly Affiliated Depot made purchases on 2, the floor price was 2050 yuan/ton. This time, it was also raised to 2120 yuan/ton, and some corn was sold.
The floor price at the Lindián Directly Managed Grain Depot on the 2 procurement day was 2080 yuan per ton. This time, it was raised to 2120 yuan per ton, but the auction still failed to attract bids.
The floor price at the Daqing Directly Managed Grain Depot was 2120 yuan per ton last time and 2150 yuan per ton this time; the auction failed to attract bids.
With reserve grain depots providing support, corn is unlikely to plunge.
Of course, it must also be acknowledged that corn is indeed under pressure, and that pressure is not low. For example, port inventories are high, demand is weak, and selling pressure is elevated. However, being under pressure does not mean that corn is bound to plunge, nor does it mean that corn has no chance to rise.
Amid the tug-of-war between bulls and bears, fluctuations in corn prices are normal, and opportunities often arise precisely amid those fluctuations.