Review and Prospect of Grain Market in the First Half of 2015

In the first half of 1., domestic grain prices showed a steady oscillation

since 2015, the domestic grain market has generally shown a stable trend, with slight ups and downs in different varieties and periods. Among them, the trend of wheat, rice and corn is relatively stable. Affected by the implementation of the target price subsidy policy, the price of soybeans has fallen significantly. According to monitoring, as of the end of June, the national raw grain purchase price index of China Grain Storage 149.31, down 0.15 percent from the beginning of the year and up 0.47 percent from the same period last year. The wheat purchase price index was 139.36, down 2.5 percent from the beginning of the year and up 0.7 percent from the same period last year; the rice purchase price index was 151.5, up 0.2 percent from the beginning of the year and up 3.4 percent from the same period last year; the corn purchase price index was 153.25, up 0.6 percent from the beginning of the year and down 2.5 percent from the same period last year; the soybean purchase price index was 108.04, down 5.9 percent from the beginning of the year, it was down 10.9 per cent from a year earlier.

See by variety:

wheat: In the first half of 2015, domestic wheat prices as a whole showed a weak operating pattern due to relatively sufficient market supply and continued weak terminal demand. With the new wheat harvest and listing in late May, the price of the main production areas is generally low. After the start of the purchase plan, the purchase price of wheat rebounded slightly and fluctuated steadily near the purchase price of the market. According to monitoring, in late June, the factory price of ordinary white wheat in Zhengzhou, Henan Province was 1.22 yuan/jin, down 0.06 yuan/jin from the beginning of the year; the factory price of ordinary white wheat in Jinan, Shandong Province was 1.2 yuan/jin, down 0.06 yuan/jin from the beginning of the year; the factory price of ordinary white wheat in Shijiazhuang, Hebei Province was 1.23 yuan/jin, down 0.07 yuan/jin from the beginning of the year; the year; the arrival price of ordinary white wheat in Guangzhou was 1.26 yuan/jin, it was down 0.065 yuan/kg from the beginning of the year.

Rice: In the first half of the year, national policies continued to dominate the trend of the rice market, and domestic rice prices maintained a steady and slightly rising trend. The pattern of "strong rice and weak rice" and "excellent strong and generally weak" was obvious. Among them, the price of japonica rice rose steadily at the beginning of the year and remained stable. However, with the restriction of the centralized auction of national policy rice and the rotation of local grain reserves, the price of japonica rice has stagnated, and the price in some areas has decreased slightly. The overall price of indica rice is stable and weak. Due to the continuous impact of low-priced imported rice, the centralized auction of policy-oriented rice and the rotation of grain reserves at all levels, the market supply of indica rice is abundant and the price is running at a low level, but the price of high-quality indica rice continues to rise. At the end of June, from the perspective of japonica rice prices, the purchase price of japonica rice in eastern Heilongjiang was 1.57 yuan/jin, an increase of 0.02 yuan/jin from the beginning of the year; the purchase price of japonica rice in Nanjing, Jiangsu was 1.53 yuan/jin, a decrease of 0.02 yuan/jin from the beginning of the year. Judging from the price of indica rice, the purchase price of early indica rice in Hunan is 1.275 yuan/jin, down 0.105 yuan/jin from the beginning of the year, while the purchase price of medium and late indica rice in Hunan is 1.425 yuan/jin, up 0.045 yuan/jin from the beginning of the year. Affected by the difference between supply and demand, the overall performance of domestic rice prices in the first half of the year was "new strong and old weak". According to monitoring, at the end of June, from the perspective of the price of japonica rice, the wholesale price of japonica rice in Beijing was 2.33 yuan/jin, a decrease of 0.03 yuan/jin from the beginning of the year; the wholesale price of japonica rice in Shanghai was 2.13 yuan/jin, an increase of 0.02 yuan/jin from the beginning of the year. Judging from the price of indica rice, the wholesale price of indica rice in Changsha is 2.05 yuan/jin, up 0.1 yuan/jin from the beginning of the year, while the wholesale price of high-quality late indica rice in Guangzhou is 2.175 yuan/jin, up 0.005 yuan/jin from the beginning of the year.

Corn: In the first half of the year, domestic corn prices showed a narrow oscillation pattern in the first quarter and then rose in the second quarter. The main reason is that this year's temporary storage and purchase volume hit a new high to raise the market expectation of corn prices, but weak consumption and a large number of imports of feed raw materials substitutes such as sorghum and barley depressed corn prices. In the first quarter, with the substantial increase in the purchase of corn from national temporary storage, domestic corn prices began to strengthen overall in March. However, in the case of sluggish demand and a large number of imports of alternative feed ingredients such as sorghum and barley, the overall trend of oscillation was maintained in the second quarter. According to monitoring, at the end of June, the purchase price of corn in Changchun was about 1.085 yuan/jin, up 0.015 yuan/jin from the beginning of the year; the purchase price in Zhaodong area of Heilongjiang was 1.05 yuan/jin, up 0.055 yuan/jin from the beginning of the year; the purchase price in Shijiazhuang was 1.17 yuan/jin, up 0.02 yuan/ton from the beginning of the year; the purchase price in Weifang, Shandong was 1.19 yuan/jin, up 0.10 yuan/jin from the beginning of the beginning of the year; the arrival price of Guangdong port is 1.215 yuan/kg, up 0.0125 yuan/kg from the beginning of the year.

Soybeans: Since the beginning of this year, domestic soybean prices have generally shown a weak downward trend. From the perspective of domestic soybeans, affected by the target price subsidy policy, since the large number of new beans were listed last year, growers' reluctance to sell has continued to increase, and the difficulty of acquiring trading entities has increased. In addition, the market demand is limited, and the purchase and sale of domestic soybeans has been light, and the price has fallen sharply at the beginning of the year. Low oscillation; from the perspective of imported soybeans, the first half of this year is in a year, coupled with the abundant global soybean supply and the continuous high level of soybean stocks in domestic ports, the distribution price of domestic imported soybean ports in the first half of the year showed an overall downward trend. According to monitoring, as of the end of June, the purchase price of domestic soybeans in Harbin was 2.0 yuan/jin, down 9.09 percent from the beginning of the year, while the distribution price of imported soybeans in South China ports was 1.51 yuan/jin, down 10.12 percent from the beginning of the year.

Edible oil: In 2015, the spot price of domestic edible oil showed a slow upward trend due to the decline in oil inventories and the expected reduction in production of new oilseeds. According to monitoring, at the end of June, the ex-factory price of grade 4 soybean oil in East China was 5800 yuan/ton, up 4.50 percent from the beginning of the year; the sales price of grade 4 rapeseed oil in Hubei was 8000 yuan/ton, up 1.27 percent from the beginning of the year; the sales price of 24-degree palm oil in Guangzhou was 4900 yuan/ton, basically the same as at the beginning of the year; and the ex-factory price of grade 1 peanut oil in Shandong was 14000 yuan, down 13.58 percent.

2. 2015 domestic grain supply and demand maintained a loose pattern in

1. Production. It is estimated that the national grain sown area will be basically stable at about 1.68 billion mu in 2015. Among them, according to data from the Ministry of Agriculture, the sown area of summer grain is expected to be 0.415 billion mu, an increase of more than 100 million mu over the previous year. Due to the overall favorable weather during the growth of summer grain, the total output is expected to achieve another bumper harvest. Comprehensive social grain and oil basic information survey data, the national winter wheat area is expected to be 0.339 billion mu, a year-on-year decrease; the national rice sown area is expected to be about 0.455 billion mu, which is the same as the year-on-year decrease, of which the early indica rice area is about 84 million mu, a year-on-year decrease of 0.6; the national corn sown area is expected to be about 0.568 billion mu, an increase of about 2.16.

Due to the generally favorable weather in the main producing areas during the growth period, it is expected that the summer grain output in 2015 will be flat and slightly increase. Among them, the wheat output is expected to be 231 billion kg, an increase of 0.43 year-on-year. According to the survey, adverse weather occurred frequently during the growth of early indica rice in 2015, and the reduction in production is basically a foregone conclusion. It is estimated that the total yield of early indica rice in the country is about 62.34 billion jin, a year-on-year decrease of 4.82. In the period of maturity, harvesting, drying and purchasing in the main producing areas of early indica rice in the south, if there is large-scale rainfall during this period, it may cause the production of early indica rice after delivery, which is not conducive to the purchase, storage and quality assurance.

2. Supply and demand. In 2015, except for soybeans, there is still a large gap, the supply and demand pattern of other major grain varieties will be further relaxed. It is estimated that the annual balance will be more than 130 billion jin, and the domestic grain inventory will reach a record level.

See by variety:

wheat. Domestic wheat supply is expected to be higher in 2015/16 than in the previous year. According to the comprehensive investigation, it is estimated that the total output of wheat in 2015 will be about 231 billion kg, an increase of 1 billion kg over the previous year. However, due to the rainy weather in some main producing areas during the wheat harvest and listing in early June, the quality of some wheat was affected to a certain extent, especially in many areas of Jiangsu, Anhui, Hubei and southern Henan. From the perspective of demand, domestic wheat consumption is expected to drop by 4.8 billion kg to 222.7 billion kg in 2015/16 due to the steady slight decrease in flour milling consumption and the decline in feed grain consumption, with an estimated new supply and demand balance of about 12 billion kg, and the domestic wheat supply and demand relationship continues to improve.

Rice. Affected by various factors such as the sluggish macroeconomic situation, the continuous impact of imported rice, and the sluggish consumption of the domestic rice market, it is expected that the domestic rice market demand will decline slightly in 2015 compared with the same period last year. In the first half of the year, the progress of the national policy rice storage was slow, and the inventory continued to be at a high level. In addition, new rice was successively listed, and the domestic rice market was abundant. On the whole, it is expected that the supply and demand of the domestic rice market this year will be more relaxed than that of the previous year, and the annual balance will reach more than 30 billion kg.

Corn. 2015 domestic corn sown area will continue to increase, is expected to increase by 12 million mu over the previous year. Affected by this, it is expected that the total corn output of the country will continue to grow without major natural disasters in the later period. Under this circumstance, affected by the sluggish macroeconomic situation and the slowdown in corn demand growth, it is expected that the domestic corn market will continue to maintain an oversupply pattern in 2015/16, and corn destocking will continue.

Soybean and edible oil. It is expected that the domestic soybean production will decrease significantly in 2015, and the rapeseed production will also decline. The total national oilseed production will continue to decline this year. Under the influence of price difference benefit driven and the continuous growth of oil rigid demand, it is expected that China's oil import volume will continue to increase in 2015, but the growth rate will be smaller than that of the previous year.

3. 2015 domestic food prices will be stable, some varieties have downward pressure.

In the second half of the year, the macroeconomic situation will continue to restrain food demand. It is expected that under the influence of sufficient national grain stocks, the successive listing of new grains, and policy-based purchasing and storage, domestic grain prices will be mainly stable as a whole, and some varieties will show a weak operating trend. It should be noted that the market rumors that the purchasing and storage policy of corn varieties may change, which will have a greater impact on the market price of corn in the new season. The factors that need to be focused on in the later stage are: first, the domestic and global macroeconomic situation; second, the policy grain and oil auction and storage policy changes; third, the weather changes in the main producing areas and the production of autumn grain.

See by variety:

wheat. It is expected that the domestic wheat market will show a narrow fluctuation in the later period. The main reasons are as follows: first, the wheat output has increased steadily and slightly this year, and the purchase of new wheat has been started and the scope has been expanded. However, due to the lower than expected quality of new wheat, the obvious difference between the north and the south has affected the enthusiasm of market purchase and sales. The purchase progress is obviously slower than that of the previous year, and the purchase volume of the supporting market is expected to be lower than that of the previous year. Second, the current downstream demand is weak, it is expected that there will still be no significant improvement in the second half of the year; third, due to the macroeconomic impact, the lack of funds in the hands of trading companies, and the lessons learned from the previous year, the enthusiasm for wheat purchases and grain holding is not high; fourth, policy wheat stocks are at a high level. The price of new grain has been suppressed. According to data from the State Grain Administration, as of the end of May, the national policy wheat inventory increased by 72% year. The main factors to be paid attention to in the later period are: first, the purchase progress and quantity of wheat in 2015; The second is the intensity and auction rhythm of policy wheat. The third is the adjustment of the purchase and sale price of policy wheat in 2016. Fourth, the price ratio change of wheat and corn and the substitution of feed; Fifth, the import of major grain varieties and related alternative varieties.

Rice. It is expected that the domestic rice market as a whole will show a stable and weak trend in the later period, "new strong and weak", "excellent strong and weak" characteristics continue. The main reasons are as follows: first, the market supply and demand remain loose, and the de stocking progress is slow; second, the operating efficiency of processing enterprises is generally low, and the operating rate is lower than that of the previous year; third, the price level of rice after the listing of new grain will be slightly higher than that of the previous year, but the increase will not be too large; fourth, the global rice production in 2015 is expected to continue to increase, and the low price import rice in the domestic market, from January to May this year, my country imported a total of 2.023 billion catties of rice, a slight decrease of 0.144 billion catties year-on-year, but it is understood that the amount of rice entering the domestic market through border trade and smuggling is still large. The uncertain factors that still need to be paid attention to in the later period are: first, the weather conditions during the harvest of new early indica rice and the growth of mid-late rice, especially the impact of El Nino phenomenon on the production of mid-late rice in the south; The second is the changes in the price and quantity of imported rice in Southeast Asia, as well as the entry of other channels such as border trade. The third is the competitive sales of policy rice and the rotation of old rice.

Corn. Low consumption and temporary storage policy adjustments are expected to continue to suppress domestic corn prices in the second half of the year. Although the reduction of grain sources in circulation outside the policy will support the domestic corn price in the third quarter, the adjustment expectation of the temporary storage policy in Northeast China in the new year and the listing of new grain will greatly restrain the domestic corn price in the later period. The main factors affecting domestic corn prices in the later period: First, the current policy corn inventory is huge. As of the end of May, the temporary storage corn inventory has increased by 50% year-on-year. Affected by this, the market can circulate grain sources before the new corn is listed will gradually decrease. Second, corn consumption is generally sluggish. According to the monitoring of the Ministry of Agriculture, the number of live pigs in 4000 monitoring sites dropped to about 0.386 billion in May 2015, while the number of breeding sows dropped to about 39.2 million, the lowest level in many years. At the same time, industrial consumption is also in a difficult situation due to the macroeconomic downturn, and the operating rate is difficult to rise significantly; third, the substitution of feed raw materials for corn has increased rapidly. Affected by the cost advantage of imported feed raw materials, the import volume of sorghum, barley and other varieties continues to increase. It is estimated that the import volume of sorghum and barley may reach 700-8 million tons and 500-6 million tons respectively this year. In addition, the large import of cassava has also formed a certain substitute for the consumption of corn industry.

Soybean and edible oil. Against the backdrop of abundant global soybean stocks, as well as the expected continued increase in the area of new U.S. soybean crops, the global soybean supply is more relaxed in the later period, and international soybean prices are expected to continue to decline, leading to a subsequent weakening of domestic imported soybean port distribution prices. Domestic soybeans, in the new season soybean production is expected to continue to decline and the external soybean weakness under the combined effect of domestic soybean prices are expected to remain low narrow oscillation operation. In addition, affected by the gradual fermentation of the El Niño phenomenon, there is a possibility of a large reduction in oil production of palm oil, rapeseed and other oil varieties, and the situation of too loose global oil supply may be improved. Coupled with the obvious digestion of domestic oil stocks, these factors will obviously benefit the oil market and help oil prices to break away from the bottom and show a rebound trend. But in view of the domestic oil demand is still weak, oil prices overall rebound space will be limited.

4. international grain and oil supply and demand relationship to maintain a loose pattern

according to the USDA's July supply and demand report, the global grain and oil supply and demand relationship remained loose in 2015/16, with world grain output expected to be 2.477 billion tons, down 0.62 percent from the same period last year. Consumption was 2.485 billion tons, up 0.83 percent from the same period last year. The final inventory was 0.523 billion tons, down 1.46 from the same period last year, and the inventory consumption ratio was 21%, down about 1 percentage point from the previous year, and remaining above the safety warning line. In addition, world oilseed production is expected to be 0.532 billion tons, down 0.77 per cent from the same period last year; consumption is 0.444 billion tons, up 1.96 per cent from the same period last year; and ending inventory is 0.1022 billion tons, up 7.52 per cent from the same period last year.

Source: China Grain Network | Time: September 16, 2015 | Responsible Editor: Zhai Tianchang