context: September marked a challenging period for the domestic corn market, with prices hitting new lows. The question remains whether there will be a turnaround in corn prices.
The domestic corn market experienced a significant price drop in September. After the Mid-Autumn Festival, some deep-processing enterprises in northern China aggressively lowered prices, with daily reductions reaching C¥200 per tonne. This aggressive pricing is primarily due to an oversupply in the market, which emboldens enterprises to push prices down.
The supply-demand imbalance is due to several factors. The 2023 corn output hit a record 289 million tonnes, with imports at 27.13 million tonnes, far exceeding the demand gap. In early September, northwest, northeast and northern China began supplying new-season corns, adding to the supply pressure.
In northern China, early October sees continued listings of new-season corn with high moisture content. Despite some farmers' reluctance to sell at low prices, market supply remains ample. Cautious procurement by downstream processing and feed enterprises limits demand growth.
As these negatives are gradually released and absorbed, price declines should slow down. Expectations for reduced Q4 imports and improving downstream demand will provide temporary positive boosts to the market. As corn prices fall below planting costs, policies to protect corn farmers' enthusiasm for next season may be introduced gradually, helping form a price floor for domestic corn markets.