Future deep processing will become the main flow of corn destocking

Future deep processing will become the main flow of corn destocking

The eight-year “temporary storage” policy for corn has brought many problems. At present, the inventory of corn is as high as 200 million tons, and the destocking pressure is huge. Insiders pointed out that with the continued advancement of corn destocking, the low price of corn may bring development opportunities to the corn deep processing industry chain. The high inventory price pressure is currently in the period of concentrated grain sales in the north of the country. However, corn prices have continued to fall, and some regions have fallen below 1,400 yuan / ton. In 2016, the state canceled the corn reserve acquisition, and changed the market price to purchase, and the government subsidized the farmers at the cost end. Since the introduction of the policy, corn prices have fallen sharply, from 1,800 yuan/ton at the beginning of the year to around 1,400 yuan/ton.

In previous years, in order to fully digest the corn in Northeast China and Inner Mongolia, the state has always adopted a temporary acquisition policy for the three provinces and one district. The temporary storage policy brought about high yield and high price of corn, but also formed a high inventory of corn. From 2012 to 2014 alone, the cumulative purchase of temporary storage corn exceeded 180 million tons, while the market sales were only over 30 million tons, which led to an increase in corn stocks and a serious excess of corn supply. The Central Economic Work Conference clearly stated that it is necessary to "do a good job in reforming the corn storage system and do a good job in digesting policy food stocks."

In 2016, the state slowed the increase in corn stocks through both market and administrative means. On the one hand, the corn storage policy was abolished, and the corn price was significantly adjusted to guide the depletion of excess capacity. The supply side reduced the corn planting area by more than 2,000 mu. On the other hand, the demand side increased the production enthusiasm of the downstream corn deep processing enterprises through subsidies and other policies. . Means of targeted sales of corn will become an important means of destocking. Guolian Securities expects that the corn stocks consumption ratio is expected to stop rising, but the situation that production exceeds demand still exists, and destocking will remain the focus of 2017.

With the fall in corn prices and the issuance of subsidies for deep processing enterprises, the profit distribution of the corn industry chain has changed. Downstream deep processing will benefit. The downstream industry chain will benefit from the current situation, corn processing accounts for an important part of corn consumption. The main products of corn processing include corn starch, ethanol, corn gluten meal, corn distiller's grains and corn oil. Since 2011, the corn deep processing industry has entered a “low valley”. Since 2014, the deep processing industry has become an important way to destock. Some experts believe that deep processing in the future will become the main flow of corn destocking. Corn starch is the main product of corn processing. Taking Jilin Changchun as an example, the starch enterprise processing 1 ton of corn theoretically earns about 600 yuan.

After the introduction of the relevant policies for the acquisition of new corn in Northeast corn deep processing enterprises in November, the profit of corn starch processing increased significantly. If the subsidy is considered, the profit of Jilin starch enterprise processing 1 ton of corn will exceed 700 yuan. Relevant plans pointed out that the promotion of advanced bio-liquid fuel industrialization, efforts to develop a new generation of biomass liquids and gaseous fuels, and strive to achieve large-scale applications in the fields of power generation, gas supply, heat supply, fuel oil and other fields. Ethanol is valued as an important bioenergy. For Chen corn, which has been in stock for more than 3 years, it is not suitable for feed or corn starch production. Developing fuel ethanol is the main way to digest this part of the grain stock.