[ China Agricultural Machinery Industry News ] The reform of the agricultural supply side is accelerating. From the perspective of investment, the corn industry chain with overall profit improvement will become the fruitful reform of the agricultural supply side in 2017. The Central Rural Work Conference, which closed on the 20th of this month, proposed that the reform of the supply side of agriculture should be further promoted. Since the beginning of this year, the adjustment of planting structure focusing on corn has been steadily advanced, and the corn planting area in non-predominant areas such as “sickle bend” has decreased, and the Ministry of Agriculture has made it clear that next year, 10 million mu of corn will be reduced and the total amount will be reduced to 4,000. Ten thousand acres.

2017 corn prices are expected to bottom out
Changjiang Securities analyst Chen Jia believes that by continuing to reduce corn planting area, reduce corn production, develop corn deep processing industry, solve the problem of inventory consumption, and the demand for corn will improve itself next year, the price of corn in 2017 is expected to bottom out. In order to improve the profitability of the entire corn industry chain.
Price bottoming
Chen Jia said in the report that the supply-side reform of corn in 2017 will mainly start from two aspects, one is to supply and continue to reduce the corn planting area; the other is to increase the subsidies and develop corn deep processing industries such as fuel ethanol and corn starch. Increase in demand for inventory. The pace of these measures will be significantly accelerated next year, and corn prices are expected to bottom out.
On the supply, the report said that last year the country lowered the price of corn storage. This year, the corn planting area showed a reduction of nearly 30 million mu, mainly in the Bay Area.
According to the report, this year the country officially canceled the temporary storage price, adjusted the grain to change the corn planting area. In general, the corn planting area will continue to be reduced by more than 10 million mu in 2017, and by 2020, the corn planting area will fall by 5,000. Ten thousand acres.
In the “13th Five-Year Plan” period, the corn reduction area plan was announced in the previous period: the Bay Area is the main corn structure reduction area. In 2020, the corn planting area in the “Shovel Bend” area is stable at 100 million mu, which is less than the current level. More than 50 million mu.
According to China Corn Network, in the provinces with declining production in 2016, the decline in the Bayer Bay area accounted for 87% of the total output reduction, and the corn production in Heilongjiang decreased by 21.4% compared with the same period of the previous year.
In terms of demand, the state is also taking measures to stimulate consumption of corn. The report believes that the current fuel ethanol industry will become the main source of growth in demand for corn consumption in the later period. The main reason for this judgment comes from:
1. The development of fuel ethanol is an effective means of consuming corn stocks. The production of 1 ton of fuel ethanol consumes about 3.1 tons of corn, and there is no obvious requirement for corn quality, which is suitable for the current large amount of grain in the state reserve;
2. From the international comparison point of view, China's current consumption of corn in the consumption of corn is relatively low, accounting for only 8% of industrial consumption, accounting for about 2.4% of the overall corn consumption ratio, while the current US fuel ethanol accounted for 44% of the total corn consumption. There is a huge gap between the two, and the industry is waiting to enter a period of rapid development;
3. The recent oil price has rebounded, driving the price of fuel ethanol to rise. According to the calculation, when the fuel ethanol price is higher than 5,500 yuan/ton, the industry will start to make profits. The upward trend of oil price will further benefit the industry.
According to the report, the fuel ethanol industry adopts targeted fixed-point procurement, and the price is 0.9111 for the price of 90# gasoline. According to the current gasoline price, the fuel ethanol settlement price is 5,830 yuan/ton. On the whole, the current cost of fuel ethanol is about 5,540 yuan / ton. Considering transportation costs, the fuel ethanol industry has basically achieved profitability.
From a later perspective, the report believes that due to the agreement of the major oil-producing countries, the oil price will continue to rise next year, and the profit of the fuel ethanol industry will enter a rising stage.
At the same time, according to Breck's data, according to the current national reserve corn stock of 236 million tons, the increase in corn consumption will bring back to a reasonable level (about 30%) for 27 years. According to the report, it is not excluded that the later countries will continue to introduce relevant policies to encourage the vigorous development of the fuel ethanol industry and further increase corn consumption.
Generally speaking, the report believes that at this stage, the grain purchase price in the northeast region is basically near the cost or even lower than the cost level, and the domestic and international corn prices have been in line, and the corn price has bottomed out this year. Looking at 2017, the planting area will continue to decrease and the demand side will improve, and corn prices are expected to rise.
How to benefit from the corn industry chain
The Yangtze River Securities report believes that the increase in corn prices has made the arable land resource-based enterprises such as Beidahuang (marketing 12.49 -0.24%, buying) fully benefit from the increase in land rent.
According to the report, comparing the historical rental income and corn price of the Great Northern Wilderness, it can be found that between 2008 and 2015, except for 2011 and 2014, the growth rate of the rent income of Beidahuang is basically the same as that of corn, because the price of corn will rise. The unit land rent is raised, which will increase the gross profit and revenue.
In terms of seed demand, the report said that under the reform of the supply side of agriculture, the seed enterprises will benefit from the increase in corn prices to promote the growth of corn seed demand.
The report also believes that destocking supply-side reforms will increase the profitability of the fuel ethanol industry by increasing subsidies. In addition, rising crude oil prices can often drive both fuel ethanol demand and corn prices, and fully benefit ethanol producers.


(Original title: Results of agricultural supply-side reforms worth looking forward to in 2017)

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