Market Focus
In July 2026, China's domestic corn cash market experienced downward pressure, with supply-demand dynamics remaining notably loose. Inventories at trading houses in both Northeast and North China are higher than last year, and high temperatures are increasing storage risks, prompting traders to sell off stocks. Downstream demand is weak, with wheat substitution continuing to divert corn consumption, leading processors to lower their purchase prices. The upcoming new crop supply and ongoing fundamental pressure suggest that corn prices may still have room to decline in the third quarter.
During the first quarter, traders increased their willingness to build inventory, market sentiment shifted bullish, and corn prices rose steadily. Starting in the second quarter, the market supply gradually moved from farmers to traders, while downstream companies generally reduced their inventories, purchasing only for immediate needs, which put downward pressure on corn prices. In June, the arrival of wheat in North China, combined with auctions of directed rice and imported corn, gave feed companies more alternative options, keeping demand for feed corn persistently weak. As of July 21, the national average corn price stood at 2,273.31 yuan per ton, down 22.41 yuan per ton from the end of June. Currently, corn inventories in the trading sector remain higher than last year, and with the harvest of southern spring corn starting in late July, the overall market supply-demand situation is relatively loose.
High Inventories in Production Regions and Heat Risks Lead to Concentrated Selling Pressure
The core pressure on China's domestic corn supply comes from the dual constraints of high inventory and storage risks. In the Northeast, the main production region, trader inventories are significantly higher than the same period last year, with ample grain remaining in the market. With the onset of the high-temperature season in July, storing high-moisture grain has become much more difficult. In closed, hot storage environments, problems like heat generation and mold are more likely, greatly increasing the risk of storage losses. As a result, traders in the Northeast are now much more willing to sell, and they are reducing prices to clear their stocks, prioritizing the sale of high-moisture grain that is difficult to store. This is further increasing the market supply of grain.
The situation in North China is similarly weak. Traders are facing a backlog of both corn and wheat inventories. Following the arrival of wheat in North China, prices have remained low, and sales are slow. Combined with the fact that existing corn inventories have not yet been fully cleared, traders are under pressure on two fronts, creating tight cash flow. The slow sales of both major grains are increasing market circulation pressure, and North China's corn cash prices lack support, following the trend of continued weakness in the Northeast.
Livestock Losses and Wheat Substitution Keep End-User Purchasing Weak
Operating rates at downstream corn processing plants are currently being maintained at a low level. With expectations of a continued weak corn price trend, these processors are purchasing cautiously, generally adopting a model of buying only what is needed and maintaining low inventories to avoid the risk of inventory devaluation from falling raw material prices. With ample grain on the market, processors have a strong inclination to push prices down, and market transactions are mostly small, need-based orders. Large-scale, concentrated restocking has not yet occurred.
Demand from the feed sector also lacks strong support. While livestock and poultry inventories remain relatively high in the country, theoretically providing a base demand for feed, the livestock breeding industry is currently experiencing ongoing losses. Farms are slowing down their restocking pace and strictly controlling raw material costs. Combined with the current price advantage of wheat, feed companies are maintaining a high proportion of wheat substitution for corn, significantly squeezing out corn consumption for feed. High livestock inventories have not translated into increased demand for corn, as substitutes continue to divert the core demand for corn.
In summary, China's domestic corn supply-demand situation is expected to remain loose in the third quarter, with the price center likely to decline further. In the first half of August, if severe weather occurs in the main production regions, it could have a short-term impact on crop growth, potentially leading to a temporary, small price rebound. However, the fundamental market conditions of high inventories and weak demand have not changed. Even if a rebound occurs, the upside will be very limited, and it will not change the overall downtrend. At the same time, the gradual arrival of southern spring corn will add to the supply, impacting the production regions. It is estimated that the national average corn price in July will be around 2,265 yuan per ton, down 10-20 yuan per ton from the June average; the average in August is expected to be around 2,260 yuan per ton, down about 5 yuan per ton; and the average in September is expected to be around 2,257 yuan per ton, down about 3 yuan per ton.
(Source: SCI99, a professional information provider)