Corn starch: the processing profit in the first half of the year rose and fell; the third quarter may be in a loss state; the processing gross profit of enterprises in the first half of the year shrank month on month

According to the monitoring of Zhuochuang Information, in the first half of 2022, the average gross profit of Corn starch enterprises was 52.93 yuan/ton, and the profit fell 70.77 yuan/ton month on month. The gross profit of Corn starch enterprises in Shandong Province showed a frequent rise and fall trend. As of June 24, the gross profit of enterprises' processing profit rose for 11 weeks, and fell for 13 weeks, with little difference in the rise or fall trend. In the past six months, the highest point of the company's processing profit margin was 222.78 yuan/ton in the week of March 10th, and the lowest point was -100.47 yuan/ton in the week of January 14th. In other periods, it mostly fluctuated between 30 and 100 yuan/ton, which is close to the average of 52.93 yuan/ton in the half year. The adjustment of ups and downs in various regions is not very significant.

Corn starch price range fluctuates and the increase is limited

The price of Corn starch accounts for about 80% of the total cost of Corn starch, and its price changes have a direct impact on the cost line, which is also an important indicator of the price trend of corn starch. Through the study of historical data in the past five years, it is found that the correlation coefficient between the two is 0.97, which is a highly positive correlation. In the first half of 2022, the price trend of raw corn and Corn starch is basically the same, showing a trend of high range shocks. However, after the corn price rose significantly in early March and late June, the starch market trend is not the same.

In the first half of the year, the price of Corn starch was in a trend of rising first and then weak and volatile. At the beginning of March, with the price of the whole industry chain strengthening synchronously, the production enterprises accelerated their delivery of goods, and the industry inventory continued to decline, from 897600 tons at the end of February to 839200 tons in the middle of March, a decline of 6.51%. The cost and demand side simultaneously provided good support, thus the price of Corn starch continued to rise.

However, according to the inventory data, as of June 24, the inventory of Corn starch industry was 876300 tons, an increase of 2.00% compared with the beginning of the month. Under the weak demand caused by insufficient starting load of downstream terminal industries, the inventory of enterprises continued to rise, which made it difficult to pass on the high cost pressure by raising the price of Corn starch, thus the industry profits began to decline gradually and entered a loss state.

Corn starch enterprises may enter the stage of increasing losses in the third quarter

With the continuous increase in grain storage costs, traders are showing a reluctance to sell at low prices, and raw material costs may still be at a high level in the third quarter. From the perspective of Corn starch price, under the condition of high inventory, weak demand except sugar industry and high supply pressure, the Corn starch market still has competitive selling phenomenon, and some enterprises may mainly reduce the inventory and ship. As a result, under the influence of high costs and weakened starch market fluctuations, the profitability of production enterprises may continue to decline, and the industry's loss situation may worsen in the third quarter. We need to focus on the changes in the operating load of enterprises after the decline in profits.

Source: Official website of China Starch Industry Association