Corn prices were still plunging yesterday, but today things suddenly changed.
What has changed?
Spot prices continued to fall, but the futures market suddenly rebounded sharply. The rebound was quite brisk, with the most-active contract closing at 2176, up 1.16%.
I believe many people have noticed this, and everyone knows that futures reflect the spot market in advance. So, with futures suddenly rising now, does this mean spot corn is also about to rebound?
To get straight to the conclusion, I think the probability of an immediate rebound in the spot market is low.
Why is that?
Futures reflect market sentiment—or, more precisely, market expectations.
Futures corn suddenly rose, mainly due to 3 factors:
First,Corn pricesAfter a continuous decline, prices have fallen below the cost line for delivery to port. Support from planting costs is becoming apparent, and the market expects cost-support sentiment to gain strength next.
Second, feed substitution is increasing.
As corn prices continue to fall, alternatives such as wheat are becoming less cost-effective. Under these circumstances, businesses are likely to continue choosing corn, so its low price has also helped it regain some of the market demand.
Third, a technical correction.
Funds are more willing to bet on a so-called “bad news is all priced in” scenario when prices are low. That is why futures corn suddenly turned upward: it has its own logic, which led to the futures market temporarily outperforming the spot market.
But looking back at spot corn, the situation remains hard to describe.
First, the spot market is still in the peak period of autumn grain arrivals, with overall supply exceeding demand.
Northeastern corn, in particular, is at the center of this round of declines.
The newly harvested grain has high moisture content and is unsuitable for storage. With a high proportion of farmers selling directly after harvest, the "flood-like" volume of wet corn coming onto the market has already put considerable strain on the Northeast market.
In addition, newly harvested grain in North China is of high quality and low-priced, squeezing the profit margin for shipping grain south from the Northeast. As a result, large quantities of grain are staying in the region, adding even more pressure.
In other words, further processing provides a stronger basis for pushing up prices.
In addition, inventories at northern ports as a whole remain high compared with recent years, so this pressure is unlikely to ease in the short term.
Although grain depots in some parts of Heilongjiang recently began purchasing grain, overall support is limited. Purchase prices are about the same as last year, only slightly higher, so they have not provided much of a boost.
Second, the situation in North China is unlikely to improve anytime soon, so pressure in Northeast China is also unlikely to ease.
North China and Shandong are currently experiencing a slow, steady squeeze. Although the number of trucks arriving at Shandong's deep-processing plants in the morning has decreased slightly, the reduction is very limited, partly due to weather conditions.
So this is only a temporary adjustment and is not sustainable.
In addition, rainfall in some areas has caused the corn toxin issue to resurface, which may affect the increase in volume ahead.
Third, demand is flat.
There are two data points worth noting.
One is that the Ministry of Agriculture and Rural Affairs lowered its forecast for corn feed consumption in the 2025/26 marketing year by 940 ten thousand tonnes in 10 month, to 2.015 hundred million tonnes.
Why was it lowered?
Because replacement increased and farming incurred losses.
Both of these are serious shortcomings and are difficult to fix.
Another factor is the simultaneous increase in industrial consumption by approximately 400 万吨, which also reflects a rebound in operating rates as deep processing plants ramp up production, with some demand for inventory replenishment.
But we all know that most corn is consumed as animal feed. Although deep processing has provided greater support for corn in recent years, this is mostly a floor of support rather than a driver of price increases.
In addition, the volume of downward revisions is clearly greater than the volume of upward revisions, so overall corn demand remains far from optimistic.
So it may not be so easy for spot prices to truly stabilize and turn upward.
Going forward, you can keep an eye on 2 things:
First, the peak of this wave of new-crop grain arrivals has passed, and corn arrivals have continued to decline. Only when the floodwaters recede will it be possible to clean up the aftermath.
Second, rotation and stockpiling or other policy purchases are implemented.
This is also an important signal the market is currently waiting for. Only once the policy measures are introduced may corn move from a wait-and-see sentiment toward a policy floor and a market floor, potentially ushering in a genuine stabilization and rebound.
In the short term, newly harvested corn with high moisture is still weighing on the market, so there may still be room for a slight dip. A recovery will take time.