In July, the long-standing stalemate in the southeast coastal corn market was broken, with second-grade corn at Shekou Port falling to 2410-2430 yuan per ton, a drop of about 40 yuan per ton for the month. As supply-demand contradictions intensified, traders holding loss-making positions still held expectations for the third quarter, preventing concentrated selling pressure, leading to only a mild price adjustment. With the northeastern new crop's pollination period ending in August, the production outlook will become clear, supply pressure will intensify, and price declines are expected to accelerate further.
In July 2026, the nearly two-month-long sideways pattern in the southeast coastal corn market finally broke. At the start of the month, the mainstream transaction price for second-grade corn at Shekou Port was still stable in the 2450-2470 yuan per ton range, but as northern port traders accelerated their shipping pace in the middle and late July, combined with the continued expansion of the feed substitution effect from new wheat, prices began to weaken slowly. By the end of July, the ex-warehouse price for second-grade corn at Guangdong Port had fallen to 2410-2430 yuan per ton, accumulating a drop of about 40 yuan per ton for the month. Although no sharp decline occurred, the downward trend has been clearly established.
From Figure 1, it can be seen that the trade inversion between northern and southern ports slightly worsened in mid-to-late July. As of July 28, based on price calculations for northern and southern ports, the theoretical trade profit margin was -47.5 yuan per ton, with the monthly average theoretical profit at about -41.45 yuan per ton, a decrease of 15.49 yuan per ton from June. Calculated using real-time prices, the average trade margin was -25.92 yuan per ton, up 0.51 yuan per ton from the previous month. The data shows that the north-south trade inversion deepened this month, but contract order profits did not expand; the price decline was primarily driven by a loosening of cost-side pressures.
Supply Pressure Eases but Remains Far from Cleared
The most significant change on the supply side in July was the emergence of clear cracks in the traders' price-supporting alliance. As the northeastern spring corn entered its pollination period in mid-to-late July, traders who had previously loosened due to financial pressures began to accelerate their shipping pace. Port arrivals at northern ports rebounded from an average of 18,000 tons per day in June to about 23,000 tons, while the purchase price for 15% moisture corn at Jinzhou Port fell from 2330 yuan per ton to below 2300 yuan per ton. However, it is worth noting that current supply pressure is only in a "slow-release" phase, far from being cleared. Most traders built their positions at costs of 2250-2300 yuan per ton, meaning current shipments are still at marginal profits or even small losses, with shipping intentions constrained by cost factors. Some traders with large holdings are still operating through a "fast-in, fast-out, small batches, multiple rounds" approach, without clearing inventory in one go. This inventory, sitting in the circulation channel, is like a "landslide lake" hanging over the market; once prices continue to fall in August, it could quickly turn into concentrated selling pressure.
Meanwhile, the pace of policy grain releases accelerated in July. Cumulative auction volumes of imported corn exceeded 1.2 million tons, while weekly releases of feed-use rice remained above 500,000 tons, continuously sending a signal of "ample supply" to the market. Although these policy grains did not directly impact spot prices in the southeast coastal regions, they indirectly reduced the flow of cross-regional grain by diverting demand in the North China and Central China areas, setting the stage for a full release of supply pressure in August.
Demand-Side Substitution Deepens, Rigid Demand Contracts Passively
On the demand side, the substitution effect deepened further in July. After the new wheat season began, prices remained weak, with its influence spreading to the Yangtze River estuary and even the entire southeast coastal region. Mainstream quotations for sprouted wheat at the Yangtze River estuary stabilized at 2360-2380 yuan per ton, while prices at the Pearl River estuary were 2470-2480 yuan per ton, offering a cost advantage over corn. According to feedback from feed companies, the proportion of wheat in complete feed formulas has increased from 20%-35% in June to 40%-45%, with corn accounting for less than 20% in some poultry feed formulas. Combined with persistent high temperatures in the south in July, which led to a seasonal decline in livestock feed intake, overall operating rates of feed companies fell by 3-5 percentage points month-on-month, passively reducing rigid corn demand. Port shipments in the south showed a "stable early, declining late" trend in July, with daily outbound volumes in the latter half of the month down nearly 10% from the first half. Port inventories remained around 400,000 tons, with the inventory-to-consumption ratio continuously rising, clearly indicating a weakening demand environment.
Market Sentiment and Substitutes: Intertwined Bull and Bear Factors, Hopes Remain
Market sentiment in July exhibited typical "bull-bear intertwined" characteristics. On one hand, spot prices weakened and futures markets fluctuated lower, with bearish sentiment gradually intensifying. On the other hand, many market participants still held a glimmer of hope for the third quarter. Many traders believe that with the northeastern spring corn entering its critical pollination period in August, extreme high temperatures and drought under the El Ni帽o scenario could trigger production reduction expectations, supporting a rebound in third-quarter corn prices. This "weather expectation" has become the last psychological defense for bulls in the market, preventing traders from fully liquidating their positions. As shown in Figure 4, although futures prices were weak, they did not diverge significantly from spot prices, reflecting the market's conflicting lack of confidence in future prices while still holding onto some hope.
The continuous impact of substitutes is gradually eroding this fragile bullish confidence. Arrivals of imported sorghum and barley in July hit a new high for the year, with total grain inventory at Guangdong Port surging to 2.9 million tons, up 65.7% year-on-year. These low-priced substitute grains continuously diverted corn demand, suppressing every attempt by corn prices to rebound through their comparative price advantage. A consensus is gradually forming in the market: as long as substitute prices do not see a significant increase, corn will struggle to stage an independent rebound.
Overall, the core feature of the southeast coastal corn market in July was intensifying supply-demand contradictions, but with a mild pace of decline. On the supply side, traders' willingness to ship increased, while on the demand side, substitutes continued to siphon off demand, shifting the supply-demand balance from a tight equilibrium in June to a looser state. However, because most traders currently face losses on shipments and still hold expectations for August weather-driven market movements, no concentrated selling pressure emerged, and prices only saw a slight loosening without a sharp decline.
In August, the market landscape is poised for a critical turning point. Three core events will be closely watched: first, the weather conditions during the northeastern spring corn's pollination period; if no widespread, sustained high temperatures and drought occur, the production outlook will become clear, and weather-related disruptions will completely dissipate. Second, the pace of concentrated selling by traders; inventory not cleared in July will likely be released more rapidly in August. Third, the price trends of corresponding substitutes and the pace of policy auction releases; in July, as production costs loosened, the price advantage of wheat in some consumption areas weakened, and the auction transaction rate for feed-use rice also declined. A reduction in the price advantage of substitutes could help relieve corn supply pressure.
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