On May 14, national grain trading center
issued a notice, starting the bidding sale of national temporary corn storage on
May 23, 2019. A total of 4 million tonnes of corn will be released to the
market, all of which were those produced in the northeast of China in 2014.
Among them, 10,000 tonnes of corn were from Jilin province and 3.99 million
tonnes of corn were from Heilongjiang province. In terms of when the auction of
national temporary corn storage starts, the auction of the first batch of
national temporary corn storage in 2018 was held on April 12, 2018 and April
13, 2018 separately and it will be held on May 23 in 2019, about one and a half
months later than that in 2018. In terms of the input of national temporary corn
storage on the market, a total of about 7 million tonnes of corn were released
to the market during the auction in 2018, 3 million more than in 2019, with 4
million tonnes of corn being released.
In addition, according to the sales reserve
price of different foods issued by national grain trading center on May 14,
2019, the sales reserve price of national temporary corn storage in 2019,
excluding charges for shipping and discount, will increase by USD29.70/t
compared with that in 2018. The increasing rate is higher than the general
market expectation, which was that the sales reverse price of national temporary
corn storage would only increase by USD14.85/t in 2019 compared with that in
2018.
Slight shortage of corn, strong desire for food storage
Currently the remaining supply of corn in the
northeast of China is limited. The amount of corn in the downstream processing
industry inventory is only sufficient for approximately another 1.5 months. The
remaining corn in Northern China accounts for about 1.5%, and the
downstream-processing industry inventory of corn will last for approximately 20
days. Throughout the whole country, the inventory of feed companies will remain
for around 40 days. Overall, 38 million tonnes of corn supply remain in China,
which will last for about 1.7 months, and when also considering businesses’
corn inventory, the remaining corn will last for approximately 3 months of
production, which means that corn can still be provided till the end of August.
It is estimated that new corn will be released to the market by the end of
October and therefore, the lack in corn in China will last for around one
month, a shortage of 23 million tonnes of corn.
In China, corn is generally not short of
supply. However, considering the limitations of national corn reserves, the
demand for corn in China is still increasing. It is anticipated that the
shortage in corn will continue for the next few years. The price of corn will
also be expected to rise in the long term as grain companies and traders
constantly store food. The quantity of temporary storage of cornin 2018 was
100.14 million tonnes, among which almost half was carried over from the
previous year. This is partially due to most grain companies and traders’
saving food. Hence, the grain companies and traders will further continue to
save food this year. It is expected that more than 40 million tonnes of corn,
or perhaps even more than 50 million tonnes, will be auctioned. It is also
worth noting that there is a degree of uncertainty toward certain feeds due to
the effect of the African swine fever virus, which will also affect the auction
volume of feed
companies.
For more information about China's corn market, please have a look at our monthly newsletter Corn Products China News.