NEW YORK, Dec. 13, 2016 /PRNewswire/ -- In July 2016, tight supply of corn is relieved in China, mainly thanks to the auctions of overstored corn and corn for temporary storage flowing into the market. Market price of corn starts to reduce slightly this month.
In early period, the phenomenon of "wheat substituting corn" became obvious as wheat price kept falling while corn price kept rising. However, as corn price falls back and wheat price rebounds, price gap is bound to eventually widen.
In the meantime, downstream product prices hit record lows. In June, HFCS (F55) ex-works price fell to a record low since 2009, which largely boosted export volume. Corn oil price also strikes a historical low in July, but its high price also prevent it from entering the mainstream edible oil market.
Xiwang Foodstuffs and Changshouhua Food, two corn oil giants in China, are planning for transformation. Additionally, some downstream enterprises also make performance improvement in year 2016. For instance, VB2 and VB6 produce Guangji Pharmaceutical and VC maker Northeast Pharmaceutical all predicted turnarounds in performance in H1 2016.
Some policies and regulations about the corn industry changes this month. On 1 July, subsidy policy for corn deep-processing officially ended in Jilin Province. Since then, all subsidy policies were canceled in China. Furthermore, from 5 July onward, Jilin Province started to promote ethanol gasoline. However, although ethanol gasoline enjoys promising market potential, China is bound to encounter difficulties in popularizing it.Since 5 July, 2016, Shandong Province has promoted ethanol gasoline in eight cities, together with many provinces that recently started promoting ethanol gasoline for the reason that it not only reduces waste gas emission, but also provides a large amount of fuel resources by utilizing waste straw. However, due to high price, consumers' misunderstanding and the competition of new alternative energies, China is bound to encounter difficulties in popularizing ethanol gasoline.
As the subsidy policy for corn deep-processing expired in Jilin Province on 1 July, 2016, all domestic subsidy policies for corn deep-processing have been officially canceled in China. Fortunately, corn deep-processing enterprises will not be impacted thanks to the slumping corn price and their transformation to reduce purchase cost. Actually, both price and supply of corn are positive for them now.
China's citric acid price rose rapidly in Q2 2016, mainly affected by the increasing corn price and improving domestic demand. Nevertheless, given the overcapacity of citric acid and the falling corn price in later period, citric acid price is likely to stop rising later.
In H1 2016, China issued successive policies about reducing corn planting area, and canceled the purchase policy of corn for temporary storage as well as the subsidy of deep-processing due to the huge inventories. Market supply remained tight as the state purchased most of high-quality corn, and market price fell to the bottom in April and then rebounded in May. Meantime, import volume of corn soared. CCM predicts, however, both market price and import volume will drop thanks to the supplementary market supply in the future.
Guangji Pharmaceutical forecasts to turn losses into gains in H1 2016, thanks to the increasing prices of its leading products, VB2 and VB6. In the past few years, the company has suffered fluctuating performances, as a result of its lack of diversity in product structure.
Since when the new-harvested wheat flowed into the market in June 2016, the domestic wheat price has suffered a slump. As a result, the narrowing price gap between wheat and corn prompted feed enterprises to substitute corn with wheat. CCM , however, predicts that the price gap is bound to eventually widen in the future.
In May 2016, export volumes of corn products showed an obvious uptrend.
In May 2016, China's export volume of xylitol hit a record high thanks to the low export price and domestic overcapacity. Meantime, the total export volume in Jan.-May also reported a YoY rise especially for that was exported to European countries. CCM predicted that supported by the low domestic ex-works price, the export volume would maintain high in later period.
The further slumping market price of furfural dragged the export price to a record low in May 2016. Meantime, the export volume fell in Jan.-May, mainly affected by reducing crude oil price and week demand overseas. CCM predicts that the furfural export will keep low after entering the slack season later.
China's ex-works prices of corn products remain relatively stable in July 2016, some of which show slight declines.
Although China's corn oil price drops to a record low in July 2016, it is still unable to enter the mainstream edible oil market due to its high price. Now, China's corn oil is mainly pitched at high-end market where Xiwang Foodstuffs and Changshouhua Food take lead.
In H1 2016, China's HFCS price showed a downtrend and hit a record low in June. Thanks to the price reduction, export volume of HFCS significantly increased.
On 30 June, 2016, Zhang Xiaojun, press secretary of the CSRC expressed that the CSRC has defined related matters about qualifications and grading filing on the domestic private securities fund management of wholly foreign-owned and joint-stock private securities fund management institutions.
Three auctions of overstored corn were held on 28 June, 29 June and 5 July in 2016 by the National Grain Trading Center and grain trading centers in all provinces (regions and municipalities).
On July 14, 2016, the National Grain Trading Center and grain trading centers in all provinces (regions and municipalities) organized a bidding fair for the corn for temporary storage, themed as "separate loan, separate pay".
On 14 July, 2016, Northeast Pharmaceutical released a correction about its performance forecast, which showed that the company would achieve a net profit of USD0-USD751,925 (RMB0-RMB5 million) in H1 2016, the figure was -USD12.95 million (-RMB86.13 million) in H1 2015.
On 15 July, 2016, the US Congress passed the Genetically Modified Food Labeling Act, which requires food manufacturers to label genetically modified (GM) ingredients on products they sell.
On 15 July, the SASAC announced that COFCO, approved by the State Council, acquired Chinatex as its wholly-owned subsidiary.
On 14 July, 2016, COFCO Biochemical released the H1 2016 performance estimate, which showed that its net profit could reach +USD1.50 million-+USD2.11 million (+RMB10 million-+RMB14 million), vs. -USD48.64 million (-RMB323.42 million) in H1 2015.
On 19 July, 2016, the State Council issued the Decision about Temporarily Adjust Related Administrative Regulations, Documents of the State Council and Department Rules Approved by the State Council in Free Trade Zones to temporarily adjust 18 administrative regulations and 4 department rules in the FTZs in Shanghai, Guangdong, Tianjin and Fujian
On 21 July, 2016, the MOA released the Agricultural and Rural Economic Operation in H1 2016 to adjust the planting ares of crops.
On 20 July, 2016, news reported by Russian media showed that the Animal and Plant Health Supervision Bureau of Russian Federation would suspend importing feed from some enterprises in four countries including China from 29 July onward because GM ingredients were found in these feed and feed additives.
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