In May, corn prices in the southeastern coastal region of China initially rose before falling, with multiple sentiment-driven disturbances causing a mid-month price decline. In June, the release of policy auction supplies and the availability of domestic substitutes will continue to suppress consumption, suggesting that corn market prices in the southeastern coastal areas still have room to decline further. Domestic substitutes and policy auctions impact the market differently, with greater attention needed in the near term on price movements of domestic alternatives.
In May 2026, corn market prices in the southeastern coastal region followed a pattern of rising first and then falling, with the inverted trade price spread worsening. In early May, influenced by factors such as shrinking grassroots grain stocks in northeastern production areas and collective price support from traders, purchase prices for corn at northern ports remained around 2,350 yuan per tonne. Calculated costs for delivery to southern ports reached 2,480-2,500 yuan per tonne. This cost support drove up quoted prices at Guangdong ports. By May 10, the mainstream ex-warehouse price for second-grade corn at Guangdong ports had risen to 2,510-2,530 yuan per tonne, an increase of 30-50 yuan per tonne compared to late April. However, as prices climbed, resistance from downstream feed enterprises to high-priced corn intensified rapidly, the pace of essential procurement slowed further, and pressure on traders to sell off inventory became increasingly apparent. Entering late May, bearish factors such as the sporadic arrival of new wheat and the finalization of auction rules for feed-use rice were successively released, leading to a rapid weakening of market sentiment. Corn quotations at Guangdong ports began to gradually decline. By the end of May, the mainstream transaction price for second-grade corn at Guangdong ports had fallen back to 2,450-2,470 yuan per tonne, not only erasing the gains from early in the month but also showing a decline of about 30 yuan per tonne compared to prices at the end of April.
As shown in Figure 1, the inverted trade situation between northern and southern ports worsened further in May. As of May 29, calculations based on shipping schedule prices between north and south ports showed the average theoretical price differential for north-south port trade in May was -47.50 yuan per tonne, with a monthly average theoretical profit of approximately -41.44 yuan per tonne. This represents a loss widening by 18.82 yuan per tonne compared to April. If calculated using real-time prices at north and south ports, the average north-south trade differential was -24.77 yuan per tonne, an increase of 5 yuan per tonne from the previous month. Although ocean freight did not rise significantly, corn prices at northern ports remained persistently high, while southern ports struggled to raise prices due to weak demand. Consequently, the inversion gap continued to widen, further compressing traders' operating margins. Trade activity between north and south ports also decreased by nearly 15% compared to April, with a focus on executing forward contracts or basis trades. Profit margins on contract orders improved slightly but still operated within a narrow inverted range.
Multiple Sentiment Disturbances Suppressed Price Increases in May
The rise and subsequent fall of corn prices in the southeastern coastal region in May was not primarily due to significant changes in fundamental supply and demand, but rather the combined suppression from multiple sentiment-driven disturbances. Firstly, expectations for the new wheat harvest were anticipated earlier. By mid-to-late May, new wheat had begun to appear sporadically in production areas such as Hubei and southern Henan. The market generally expects this year's wheat supply to be overall ample, but with a higher proportion of sprouted wheat. The substitution advantage of low-priced sprouted wheat is very pronounced. The market began pricing in substitution expectations ahead of time, leading to increased bearish sentiment among traders and downstream enterprises regarding future corn prices and a reluctance to actively raise prices. Secondly, with the finalization of auction rules for feed-use rice, although the release pace is moderate, market concerns about substitution pressure persist. The panic sentiment previously fueled by rumors has not completely dissipated. Following the policy implementation, downstream enterprises maintained a wait-and-see attitude, hesitant to stock up aggressively, leading to a further contraction in the scale of essential procurement. Figure 2 clearly shows that the main futures contract began to show a weakening trend in mid-May, which intuitively reflects the shift in market participant sentiment.
Furthermore, while cost support existed, it was insufficient to drive prices higher. Purchase prices for corn at northern ports consistently held at a floor of around 2,300 yuan per tonne, translating to a cost near 2,450 yuan per tonne for delivery to southern ports. Additionally, inventory levels at southern ports remained relatively low, without significant inventory pressure. Therefore, the downside for spot prices was limited. However, against the backdrop of weak demand, inventory and cost support could only serve as a floor, unable to propel sustained price increases. This ultimately resulted in a pattern of narrow price fluctuations and a continuously worsening inversion.
Policy Auctions Progress, Consumption Suppression to Persist
Entering June, the auction of feed-use rice will formally enter a stage of regular releases. The consumption-suppressing effects of other policy auctions and domestic substitutes on corn will continue to manifest. The targeted sales of over-aged rice for feed use commenced on May 29, with an initial release of 1 million tonnes, achieving a 64% transaction rate at an average price of 1,522 yuan per tonne. Based on the rule design, participation in this release is limited to designated feed enterprises and traders. In terms of cost, after adding expenses for warehousing, processing, and freight, the delivered cost to southern ports exceeds 2,400 yuan per tonne. While this offers some advantage compared to current corn prices, it is not significant. Considering the time for release from storage and pricing, the impact on the southeastern coastal region in the near term is limited. However, as domestic wheat enters the market in volume in June, wheat prices are highly likely to remain low. The叠加 effect of dual substitution will further divert feed consumption away from corn.
According to industry research, major feed enterprises in the southeastern coastal region have already obtained qualifications to participate in the rice auctions but are currently in a观望 stage. With the wheat harvest, price quotations for wheat (including sprouted wheat) at ports along the Yangtze River and in the southeastern coastal areas have become more active. Prices along the Yangtze River estuary are generally below 2,400 yuan per tonne, while in the Pearl River estuary they range from 2,470 to 2,500 yuan per tonne. Compared to corn, these prices are within the substitution range, attracting high attention from downstream enterprises.
Some enterprises have already begun to reduce the proportion of corn in their inventory, initially controlling it within a range of 10% to 15%. On the demand side, there is no clear expectation for significant growth in feed demand in the southeastern coastal region in June. Although hog inventories remain stable, breeding enterprises strictly control feed costs and prefer to use lower-priced substitutes. Therefore, corn demand is unlikely to see significant growth.
Additionally, auctions for imported corn stocks have also commenced in early June, with an initial auction volume of 150,000 tonnes. Although the volume is not large, it still exerts a bearish influence on market sentiment and corn consumption volume, warranting continued attention to the frequency of subsequent related auctions.
June Price Trend Forecast: Ample Supply and Demand, Prices to Fluctuate Lower
Overall, the corn market in the southeastern coastal region in June is expected to maintain a pattern of ample supply and demand. On the supply side, existing port inventories are relatively sufficient. Inventories at the six major northern corn trade ports exceed 3.5 million tonnes. Although recent arrivals at ports have been low and current inventories are below last year's levels, substitute supplies are ample. On the demand side, overall demand is difficult to boost due to suppression from dual substitution, combined with ongoing sentiment pressure from the wheat harvest, brown rice auctions, and import auctions. Corn prices are highly likely to show a fluctuating downward trend.
It is anticipated that the mainstream transaction price for second-grade corn at Guangdong ports in early June will fall to the range of 2,430-2,460 yuan per tonne. If new wheat prices remain low after harvest and substitution volumes exceed expectations, further price declines cannot be ruled out. If wheat prices rebound relatively quickly after harvest and substitution impact is lower than expected, prices may stabilize and stop falling by mid-to-late June. This is because trade costs provide strong support at the price bottom, and downstream feed enterprises' corn inventories remain below the levels of the same period in previous years, maintaining a rigid demand for quality corn, making a sharp price drop less probable.
For market participants, June requires close attention to price trends following the new wheat harvest, as well as the subsequent auction节奏 and market entry of feed-use rice. Given their limited volume, imported corn auctions are expected to primarily influence market sentiment.
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