Corn prices in the southeastern coastal markets of China exhibited a sideways trend in June, according to an analysis. The price for second-grade corn at Shekou Port was held within a range of 2,450 to 2,470 yuan per metric ton, with monthly fluctuations of less than 20 yuan. This market stasis resulted from the interplay of three key factors: a reluctance among traders to sell, preventing significant selling pressure from materializing; comprehensive demand suppression from new wheat and rice substitutes; and a continuous contraction in market trading activity. Looking ahead to July, supply-side pressures may become more apparent, creating potential for a price decline.
Throughout June, the corn market in the southeastern coastal region was characterized by typical sideways consolidation. At the beginning of the month, pressured by the commencement of feed-use rice auctions and expectations for the concentrated arrival of new wheat, the transaction price for second-grade corn at Guangdong ports dipped from 2,460 yuan per ton to a low of 2,440 yuan. However, as prices approached traders' cost thresholds, a firming sentiment and reluctance to sell at a loss emerged in northern ports. Coupled with persistently low inventory levels at southern ports, this provided strong support, preventing a further significant drop. By the end of June, the mainstream transaction price at Shekou Port remained within the 2,450-2,470 yuan per ton band, with trading volumes further shrinking compared to May, leaving the market in a stalemate with limited upward or downward momentum.
The data indicates that the price inversion between northern and southern ports did not intensify in June. Calculations based on port prices show a theoretical trade loss of -30 yuan per ton as of June 29th, with a monthly average loss of approximately -25.75 yuan per ton. This represents a narrowing of 15.70 yuan per ton compared to May. Under the prevailing contract-based trading model, profitability for traders has not shown significant improvement.
This market performance aligns with early-June expectations, where the downward pressure from substitutes and the upward support from cost levels largely offset each other, resulting in a balance of forces and prices oscillating within a narrow range.
Supply Side: Low Reserves but No Selling Rush
Supply in the southeastern coastal region during June was marked by stable prices amid shrinking volumes. In absolute terms, farmer-held grain stocks in the northeastern producing areas are nearly depleted, with grain resources concentrated in intermediate trade channels. The volume of grain arriving at northern ports from non-state sources remained low, and inventories at major trade hubs like Jinzhou and Bayuquan ports continued a slow decline. By late June, total inventory at six key northern ports was approximately 3.07 million tons, below the level seen in the same period last year. In southern ports like those in eastern Guangdong, total domestic and imported corn inventory stood around 399,000 tons, with domestic corn inventory only about 200,000 tons, of which readily available spot supply accounted for less than 30%.
The core issue on the supply side is that while traders hold inventory, their acquisition costs have risen to around 2,250-2,300 yuan per ton, translating to a delivered cost near 2,400 yuan per ton at southern ports. Near this cost level, traders are generally holding back sales to support prices. Although market supply this year remains slightly higher than last year, the grain is relatively dispersed, and there is no unified willingness for concentrated selling. Purchase prices at northern ports have fluctuated within a 2,320-2,330 yuan per ton range, operating at an inversion compared to production area prices, which has prevented a significant increase in port arrivals. Consequently, the June supply situation was one of "price without market" – limited availability but traders unwilling to sell at a loss, resulting in a constrained effective supply.
However, this dynamic is subtly shifting. As July approaches, with spring corn in the northeast entering the jointing stage, some traders are facing capital turnover pressures. Additionally, the warehouse-clearing effect following the new wheat harvest is emerging. This could lead to a phase of concentrated sales in mid-to-late July, potentially bringing latent supply pressures to the fore.
Demand Side: Substitutes Dominate, Rigid Demand Struggles
Demand-side factors were the primary constraint on price increases in June. While feed mills maintained necessary procurement, the influx of various substitutes significantly diverted consumption away from corn.
Firstly, the concentrated arrival of new wheat constituted the major substitution pressure. By mid-to-late June, new wheat from regions like Hubei and southern Henan had hit the market in large volumes. Prices for sprouted wheat in the Yangtze River estuary were generally below 2,400 yuan per ton, and around 2,470-2,500 yuan per ton in the Pearl River estuary, placing them within the substitution range compared to corn. Some large feed producers have reduced their corn procurement ratio to 10%-15%, accelerating the substitution of low-cost sprouted wheat for quality corn.
Secondly, feed-use rice auctions have entered a phase of regular releases. The initial auction on May 29th offered 1 million tons, with a 64% take-up rate at an average price of 1,522 yuan per ton. After factoring in unloading, processing, and freight costs, the delivered cost to southern regions exceeded 2,400 yuan per ton. Subsequent auctions continued in June, and while their immediate impact on the southeastern coast was limited, they are expected to persistently divert medium-to-long-term demand.
Thirdly, the auction of imported corn commenced in early June, with an initial offering of 150,000 tons. Although the volume was not substantial, it exerted a bearish influence on market sentiment. Furthermore, substitute grains like imported sorghum and barley continue to circulate at ports, further squeezing corn consumption space.
Overall, there was no clear expectation for feed demand growth in June. While hog inventories remained stable, livestock producers are strictly controlling feed costs, showing a strong preference for lower-priced substitutes. This environment makes a substantial increase in corn demand unlikely. Shipments from southern ports saw a slight decrease compared to May, with little active inquiry at ports; trading was mostly limited to fulfilling existing contracts.
Market Sentiment Bearish, Trading Activity Sluggish
Market sentiment in June was generally weak, with futures contracts trading at a discount to spot prices, exerting downward pressure. The discount for the main contract approached 50 yuan per ton, contributing to a cautious and pessimistic mood among traders.
The availability of substitutes and policy-driven auctions formed the core bearish factors for sentiment. The market has established a substitution priority hierarchy: wheat value > imported corn > targeted rice. Enterprises are aligning their procurement pace accordingly. As long as substitute prices remain stable, corn continues to face comparative price pressure. Under this mutual constraint, corn lacks independent upward momentum.
In summary, the sideways movement of corn prices in the southeastern coast during June was not coincidental but the result of three converging factors. First, the supply side lacked a unified selling sentiment; traders' reluctance to sell and low port arrivals in the north limited effective supply, capping downside price movement. Second, demand remained subdued due to ample substitutes; new wheat, rice, and imported grains collectively diverted feed consumption, leaving rigid corn demand intact but devoid of elasticity. Third, market trading volumes continued to shrink, with neither bulls nor bears possessing sufficient impetus to break the deadlock, leaving prices oscillating narrowly between cost support and substitute price levels.
Looking ahead to July, demand is expected to remain in a seasonal lull, further burdened by abundant substitute supplies, suggesting little improvement for corn consumption. Consequently, the supply side is likely to become the dominant factor driving price movements. Several key developments warrant close attention. First, weather conditions during the critical growth period for the new corn crop; 2026 is forecasted as a strong El Niño year, with the northeastern production region facing a pattern of "southern flooding and northern drought." Rising risks of high temperatures and drought in July could spark speculation about yield reductions, potentially countering or even reversing supply pressure expectations. Second, the subsequent pace of feed-use rice auctions; regular releases will continue to divert demand and may gradually increase supply pressure from producing areas. Third, the selling pace of traders at northern ports; despite currently low inventories, capital pressures and shifting sentiment could directly lead to a decline in delivered costs to southern ports. Fourth, the frequency of imported corn auction releases; while volumes are limited, their impact on market sentiment should not be overlooked.
Considering these factors, corn prices in the southeastern coastal region are likely to face modest downward pressure in July due to increasing supply-side pressures. The mainstream transaction price for second-grade corn at Shekou Port is expected to trade within a range of 2,430 to 2,460 yuan per ton. If weather-related speculation intensifies in the latter half of the month, prices may find support and stabilize. However, against a backdrop of ample substitute grain supplies and inelastic demand, the potential for a sustained unilateral price increase remains limited.
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