In the first quarter of 2026, domestic corn prices experienced a strong upward trend. The national average price started at 2,235 yuan per tonne on January 5th and climbed to 2,349 yuan per tonne by March 18th, marking a cumulative increase of 5.1%. Although prices saw a slight decline in late March due to increased selling activity by traders, the national average still stood at 2,331 yuan per tonne by March 31st, representing a significant year-on-year increase of 7.23%.
Regionally, both the Northeast and North China markets saw price increases in the first quarter, but the fluctuations were more pronounced in North China. This trend was driven by steady sales progress at the grassroots level and robust downstream demand. On one hand, farmers sold their grain in an orderly manner, avoiding concentrated selling pressure. On the other hand, despite poor profitability, deep-processing enterprises gradually increased their operating rates. Coupled with high livestock inventories boosting feed demand, these factors collectively supported the price rise. In North China, lower inventories at deep-processing plants led to higher purchasing enthusiasm compared to the Northeast, contributing to the region's larger price increase. Additionally, the price difference between the Northeast and North China remained below the usual freight cost of 150 yuan per tonne throughout the quarter, indicating limited inter-regional trade opportunities and a weak price influence from the Northeast on North China.
The supply situation in the second quarter is expected to shift from loose to tight. In early April, the remaining grain stocks in production areas are gradually being depleted, and grain sources are increasingly concentrated in the hands of traders. Influenced by the price decline in late March, some traders have become hesitant. Combined with high moisture content in corn inventories in North China and the urgent need to clear storage before the wheat harvest, traders may release moderate volumes of grain in April, leading to a relatively loose market supply.
However, this looser supply condition is unlikely to last. As the wheat harvest progresses in North China, trader inventories will gradually diminish, and effective corn supply may tighten starting in May. Furthermore, grain sales in the Northeast are nearing completion, with the market now focusing on dry grain transactions. During the early phase of grain circulation, trade costs have solidified at a base level, increasing the cost factor's influence on prices. Traders are reluctant to sell below cost, and as time-related costs rise, the cost base will provide stronger support for prices.
On the demand side, growth in deep-processing demand for corn is expected to be limited in the second quarter. In the first quarter, the average operating rate for corn deep-processing industries nationwide was 66.54%, down from both the previous and same quarter last year, primarily due to poor processing profitability. Although operating rates saw a seasonal rebound in March, overall profitability remains weak, with the corn starch industry averaging a profit of only 48.17 yuan per tonne, and the ethanol industry in Heilongjiang still hovering near breakeven.
Entering the second quarter, summer beverage demand may lead to a slight increase in operating rates for the corn starch industry. However, for the ethanol industry, eased tensions in the Middle East and stabilized oil prices have narrowed profit margins for related substitutes, limiting significant growth in operating rates. Additionally, some deep-processing enterprises in the Northeast have already completed 60%-70% of their annual procurement plans and maintain relatively high inventories, meaning procurement in the second quarter will mainly cover essential needs, with limited overall demand growth.
For feed demand, increased arrivals of substitutes like imported barley may lead to higher usage of corn alternatives in feed production, potentially constraining corn demand. Nevertheless, high livestock inventories provide a substantial base for feed demand. As a primary energy feed, corn's core role is unlikely to be challenged in the short term, ensuring a steady essential demand.
Market sentiment is mixed, with bulls and bears交织. Traders are currently in a wait-and-see mode. Previous price increases have allowed some to accumulate profits, leading to a willingness to cash in, yet high inventory costs limit their acceptance of lower prices. Persistently low inventories in consumption areas also foster a reluctance to sell among many traders, resulting in a gradual, rather than concentrated, sales pace.
The futures market, a direct reflection of market sentiment, offers no clear direction. On one hand, the spot market faces a phase of loose supply and limited demand growth. On the other, cost support, demand expectations, and international uncertainties provide some support for forward sentiment. Moreover, the delayed implementation of rumored government substitute auctions has diluted some bearish sentiment. Amid these conflicting factors, buyer-seller negotiations will become routine, with prices likely oscillating within a range centered on arrival costs.
Overall, corn prices in the second quarter are expected to show a pattern of initial decline followed by a moderate recovery. In April, increased sales by traders will lead to relatively loose supply, potentially extending the weak trend from the end of the first quarter. The lowest prices are likely around late April, with the national average price finding support near 2,300 yuan per tonne.
Starting in May, the growing influence of costs and tightening supply, combined with essential procurement by deep-processors and cost support, should lead to a gradual price rebound. However, constrained by limited demand growth and increased availability of substitutes, the upside potential is expected to be modest, with the national average price possibly testing a high of 2,350 yuan per tonne.
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