Corn starch for food use

Market Intelligence on Edible Corn Starch

I. Price Trends
1. Major Domestic Production Areas: The average ex-factory price in Shandong is 3,300–3,400 RMB/ton, up approximately 2% from the previous week. In Hebei, the average price is 3,250–3,350 RMB/ton, with a 1.5% increase. Mainstream prices in Northeast China range from 3,100–3,200 RMB/ton, showing minimal fluctuation.
2. Sales Regions: The port arrival price in South China is 3,450–3,550 RMB/ton, and in East China, it is 3,400–3,500 RMB/ton. Both regions have seen slight price increases due to rising logistics costs and recovering demand.

II. Supply and Demand Fundamentals
1. Supply Side:
- Operating Rate: The average operating rate of the domestic corn starch industry is approximately 65%, up 2 percentage points from the previous period. However, some enterprises maintain low operating rates due to high raw material corn costs.
- Inventory: Total inventory in major production areas is approximately 450,000 tons, down 8% from last month, as increased orders have accelerated inventory digestion.
2. Demand Side:
- Food Industry: Stockpiling demand ahead of the Mid-Autumn Festival and National Day is strong, with increased procurement by processors of pastries, candies, and vermicelli.
- Industrial Demand: Operating rates in industries such as papermaking and chemicals have recovered, leading to steady growth in starch demand.
- Exports: Orders from Southeast Asia have increased, with August export volume up 12% year-on-year, supporting the domestic market.

III. Cost Side
1. Corn Prices: The average spot price of domestic corn is 2,800–2,900 RMB/ton, up 10% year-on-year. Raw material cost support remains strong, influenced by expectations of a new-season corn harvest reduction and farmers' reluctance to sell.
2. Processing Profit: Corn starch processing profits in Shandong are approximately 50–80 RMB/ton, showing improvement from the previous period. However, in Northeast China, profits remain near the break-even point due to high corn prices.

IV. Policy and Market Sentiment
1. Policy: The suspension of state reserve corn auctions has strengthened market expectations of tight corn supply in the near term.
2. Market Sentiment: Bullish sentiment among traders and downstream enterprises has increased, leading to stronger willingness to stockpile and intensifying short-term supply-demand contradictions.

Analysis and Judgment
1. Short-Term Drivers: The concentrated release of stockpiling demand ahead of the two festivals, combined with high raw material corn costs, is driving corn starch prices to remain firm.
2. Medium-Term Risks: Key factors include the progress of the new-season corn harvest, the volume of imported corn arrivals, and the sustainability of downstream industry demand.
3. Impact of Competing Products: The price gap between wheat starch and corn starch has widened, causing some food enterprises to switch to wheat starch, which may limit the upside potential of corn starch prices.

Forecast
1. Price Range: From late September to mid-October, mainstream domestic edible corn starch prices are expected to remain in the 3,300–3,500 RMB/ton range, with Shandong prices potentially exceeding 3,500 RMB/ton.
2. Trend Assessment: Prices are expected to remain stable with a firm bias before the festivals. Post-festival, attention should be paid to the new-season corn harvest; if supply increases, prices may see a slight pullback.
3. Operational Recommendations: Downstream enterprises may consider increasing inventory to meet holiday demand. Traders should closely monitor changes in corn costs and policy developments to avoid the risks of stockpiling at high prices.