The tariff incident has significantly boosted corn prices, taking advantage of the opportunity to rise again!

Recently, the trend of corn prices has once again been strong, and the fundamentals have continued to improve. At the macro level, with the boost of the China US trade game theme, the agricultural product sector has surged, and the corn market has also taken the opportunity to return to the peak price range after the year. On March 4th, China issued countermeasures to impose tariffs on the United States and Canada, including a 15% tariff on wheat and corn originating from the United States, and a 10% tariff on sorghum and other crops. On March 4th, China Grain Reserves Corporation announced the official plan to continue increasing storage, mainly in the northeast region and some in southern provinces, further expanding the scale of domestic corn storage in 2024. Drive up sentiment in the corn market.

The pace of grain sales has accelerated, and the pressure of surplus grain has sharply decreased

In terms of grain sales progress, as of the end of February, the grain sales progress in Heilongjiang exceeded 70%, Jilin exceeded 60%, Liaoning reached 80%, Inner Mongolia was close to 70%, and North China as a whole was also close to 70%. Compared with the same period last year, it was generally 10-20% faster. According to Zhuochuang data, the surplus grain in the production area is only half of the same period last year, and Steel ｕｎｉｏｎ data also shows that the surplus grain is one-quarter less than last year. This means that the pressure on surplus grain sales in the market has significantly decreased year-on-year, and the pressure on the supply side has been effectively alleviated. The expected pressure on the volume of grain production in March is becoming weaker, providing strong support for corn prices.

Although the inventory is not low, the expected pressure is not significant

On the side of deep processing enterprises, the current corn inventory is at a relatively neutral level compared to the same period last year, but higher than the same period last year. As usual, around March, with the last peak of grain sales at the grassroots level, deep processing enterprises usually carry out inventory building activities. However, this year's situation is special, with more grain produced in the early stage and less surplus, making the expected inventory that deep processing enterprises can establish in the future not high. In order to ensure the supply of raw materials, enterprises have a strong willingness to purchase. Recently, the price of deep processed corn in production areas has been raised by 20-50 yuan/ton. In terms of port inventory, grain inventory in the northern and southern ports is at its highest level in the same period of previous years. Driven by the rise in the futures market, the price of corn at ports has recently increased by 50-60 yuan/ton. Although the pressure on port inventory appears to be high on the surface, it is reported that the proportion of contracted grain is relatively high, and due to the limited surplus grain in the production area, deep processing enterprises have raised prices to purchase, which has limited the actual pressure on port inventory and has not hindered price increases.

The price difference of wheat substitution is stable, but its substitution effect is limited

In terms of market substitution, the substitution situation between wheat and corn is the focus of market attention. Recently, the advantage price difference of wheat as a substitute for corn soybean meal for feed has been around 50 yuan/ton. Although corn prices have continued to rise, wheat prices are also increasing, which has prevented the expansion of wheat's substitution advantage and limited its substitution for corn. Currently, wheat only has a preliminary substitution advantage and has not yet caused a significant drag on corn prices. Macro events have boosted sentiment, and the market has taken the opportunity to rise at the macro level. The United States has once again imposed a 10% tariff on China, and China's countermeasures involve various agricultural products. In terms of corn, China's policy on corn imports has been tightened for nearly a year, with very little monthly imports. The US Agricultural Weekly Export Sales Report shows that since the start of the new year of corn in September 2024, the cumulative export of corn to China has only been about 30000 tons, which is extremely low in quantity. Therefore, the actual impact is relatively limited. In terms of sorghum, China's dependence on US sorghum imports is high, and the decrease in sorghum imports caused by the imposition of tariffs is relatively beneficial to the domestic corn market. However, China has also tightened its sorghum imports since August last year, with limited impact. However, the tariff event still has a significant boost to the sentiment of the market, driving the overall rise of the agricultural product sector. Corn itself is generally good, but in the early stage, due to the high rise of the market, prices were lacking. New Upstream Action, This Round of US Tax Increases' Stirring ' It just gave the corn market a new upward momentum. But how high the corn market can soar in this round still depends on the degree of coordination between the spot market's gains and the intensity of emotional events. In the medium to long term strategy, the focus is still on buying dips and placing long orders.