What are the corn substitutes? How big is the impact of their imports on the domestic corn market?
Through analysis, the total amount of imported substitutes in 2018 will decline compared to 2017, the decline is mainly due to the high cost of imported substitutes, the domestic corn price advantage highlights.2018 feed enterprises to restore and deep processing put into operation increased, the demand for corn increased, the reduction of imported substitutes will undoubtedly increase the space of domestic corn demand.
Import of substitutes in recent years
Influenced by the domestic and international price difference, the import of corn and substitutes has increased year by year in recent years. The large number of imports of corn and substitutes imports, crowding out the domestic corn consumption market, increasing the pressure of corn de-stocking.
The alternatives mentioned here mainly include sorghum, barley, wheat, cassava, DDGs (lees).
It is understood that as of the end of 2017, China's imports of corn, sorghum, barley, wheat, DDGS and other imported substitutes totaled 21.45 million tons, an increase of 400,000 tons over 2016. Among them, barley imports increased at a high rate, making up for the decrease in DDGs imports.
According to China's General Administration of Customs, imports of corn and its substitutes in 2017 were as shown in the table above, with sorghum imports declining by 24% year-on-year, barley imports increasing by 78% in metropolitan areas, and corn imports declining by 11.64% year-on-year. Although corn imports fell, but not as optimistic as expected, especially at the end of the year, domestic corn prices continue to rise, corn imports in December surged from the ring. If the internal and external price difference continues to expand, the pressure on imports in the future is still very large.
Corn substitutes imports annual statistics
Time
Corn imports
Sorghum imports
Barley imports
Wheat
ddgs imports
Total
2009
264132
2010
1572394
138929
1711323
2011
1764159
454877
1248807
3467843
2012
5206747
163604
3688648
9058999
2013
3264552
119585
5507052
561450
9452639
2014
2599349
5775887
1655709
2972022
565040
13568007
2015
4730035
10815809
10683190
2972743
6808084
36009861
2016
3168118
6450955
5005004
3374300
3066621
21064998
2017
2828343
5056793
8863510
4314734
390789
21454169
Corn imports are significantly affected by international price fluctuations
Data released by China's General Administration of Customs showed that corn imports totaled 2,825,448 metric tons in 2017, a decline of 10.78 percent from 2016. With the domestic corn supply-side reform, domestic corn stocks have been effectively consumed. However, from the second half of 2017 onwards, the domestic and international price difference continued to widen due to the higher domestic corn prices, attracting Chinese buyers to seek cheap corn from overseas again. From the comparison chart of corn imports and average unit price, it can also be found that the average unit price is lower in the month of corn imports are also higher, and the unit price of 200-250 U.S. dollars per ton, the import advantage is more obvious.
Global market, the U.S. Department of Agriculture January supply and demand report was negative. Global corn stocks at 206.6 million tons, up 2.5 million tons from the previous year, higher than expected, mainly due to increased stocks in Brazil and Pakistan. U.S. corn acres (record 176.6 bushels per acre), production (14.604 billion bushels), edible/growing/industrial use was raised by 10 million bushels, and feed/adjusted use was lowered by 25 million to 5.55 billion bushels, as overall supply increased while demand declined, and U.S. corn year-end stocks were raised by 40 million bushels to 2.477 billion bushels.
Looking ahead to 2018 corn imports, it is expected that the stage of imports will surge, but the annual imports still maintain a small decline. On the one hand, U.S. corn prices have seen a bottom, and global corn ending stocks are set to decline for the second consecutive year, projected at 168 million tons, down 18% year-on-year.
Global corn supply and demand will be in a delicate balance in 2018/19, and a major production problem in any major exporting country could trigger a spike in corn prices. The reason why the sharp drop in corn prices over the past four years hasn't led to a rapid decline in corn production as well is due to rapidly falling production costs in addition to continued good weather. Meanwhile, strong demand will boost corn prices as U.S. ethanol exports are expected to grow. A weaker U.S. dollar exchange rate is also providing support.
The number of domestic corn storage auctions is expected to increase in 2018, coupled with the advantage of planting profits in 2017, it is expected that the domestic corn planting area faces a large recovery in 2018. Therefore, the rising trend of domestic corn prices in 2018 will slow down, and phased price movements are the norm; while international corn prices stabilized and advanced, and the number of imported corn continued to decline.
Barley, sorghum cost support import prices are difficult to decline
It is understood that before 2013, the number of domestic barley and sorghum imports is stable, to maintain the level of hundreds of thousands of tons; after 2013, the advantages of barley and sorghum are accepted by the feed enterprises, imports soared, and reached an extreme value in 2015.
In 2016, China in order to regulate the market, strengthened grain regulation, policy risk increased, forcing some small and medium-sized importers to withdraw from the port, barley imports in 2016 fell sharply; in 2017, due to the price of Australian barley has an advantage, the importer once again increased the purchase of Australian wheat, barley imports in 2017 increased again.2017 January-December **** Imports of barley 8863511.162 tons, an increase of 77.09% over 2016, imports approaching the 2015 calendar year high.
Sorghum, due to the import price lift significantly, the import advantage is weaker than barley, the import volume is a downward trend, January-December 2017 *** imported 5056792.597 tons of sorghum, down 23.93% compared with 2016.
According to market news, global barley production in 2017/18 will be significantly lower, barley import prices are expected to be further high, sorghum by the cost support is also expected to be difficult to decline in price, imports to maintain the weak. From the point of view of imported barley, sorghum prices and shrinking supply, there is some support for the domestic corn market.
DDDS imports all the way down
According to China Customs data, China's imports of DDGS in January-December 2017 amounted to 390,790 tons, a decline of 87% compared with 2016. The main reason is that since January 12, 2017, China has implemented the final anti-dumping and countervailing ruling on U.S. DDGS, i.e., the anti-dumping duty rate ranges from 42.2% to 53.7% and the countervailing duty rate ranges from 11.2% to 12%. Although VAT exemption on imports was resumed on December 20, 2017, and the import cost dropped by about 9.60% straight away, supported by the rigid demand, the purchasing volume of other countries kept increasing, resulting in the imported DDGS foreign prices kept going up, which made the current cost increase instead of decreasing. Traders continue to remain on the sidelines in the face of the upside down market.
Domestic DDGS by corn to stock, fuel ethanol production capacity increase and other policies, DDGS annual supply growth is more obvious, compared with imported DDGS price advantage is outstanding, the market for domestic DDGS procurement is more active.
In terms of 2018, the new capacity of alcohol companies continue to put into production, DDGS supply is sufficient, the increase in corn production or make DDGS price advantage continued.
Corn de-stocking situation
Corn de-stocking in 2017 went well, the total volume of policy corn auctions for the year exceeded 57 million tons, significantly exceeding the market estimate. 17/18 national corn production continued to decline, the supply gap is expected to be amplified, the market seems to be crazy again. In the face of supply and demand imbalance, the market blew up to grab grain "wind". Downstream demand was released in advance, making corn prices quickly from 1650 yuan / ton to 1850 yuan / ton. The grain auction came early, so that the crazy market put out the fire.
From January 9, Shanxi rotation corn auction since the start, the Chinese grain storage put more than 300,000 tons of corn, *** turnover of 200,000 tons. From the region's turnover situation, the first batch of turnover data put significantly better, the subsequent turnover gradually declined, bidding enthusiasm gradually cooled down, the premium situation is also weakened by the strong. Shanxi, Inner Mongolia, Beijing and Jilin and other places in the starting price of each depot are higher than last year's overall 100-120 yuan / ton.
Currently, the Jilin market price of second-class natural dry corn 1730-1750 yuan / ton, while the auction reserve price of rotating corn in the Jilin area of the CCSR is 1700 yuan / ton (not taking into account the case of premiums), coupled with the 30 yuan / ton of the warehouse fee, the cost of 1730 yuan / ton, basically the same as the market price. It can be argued that this wave of auction in the northeast is likely to be a solution to the situation of local grain shortage.