The change of market price of any object is actually caused by the change of supply and demand in the market, and so is the price of corn. Last year, the price of corn suddenly went up all the way because of the epidemic situation and the trade relationship between the two countries, and the overall supply in the domestic market was less than demand, so the price continued to rise.
Reasons for the price drop:
1. Buyer.
We need to know that the income of the purchaser is purchased from the farmers, and then sold at a high price, earning the difference from the middle. In the process of rising corn prices, most buyers will keep a small amount of stocks for sale, so many buyers still keep old corn stocks in their hands.
However, a large number of new corn will be listed soon, and the price is bound to go down. Some small buyers will stop in time to sell the old grain piled up in the warehouse, and the old grain will flock to the market together with this year's new grain, which will make the situation of oversupply in the market more serious. Then the acquirer will make great efforts to lower the price, so the price of corn will go down in stages, and the price drop in the main producing areas will be very obvious.
2. The processor.
The profit of processors is to buy back grain from buyers at low prices, and then process it into finished products such as flour and feed. The impact of food prices on them is the cost of processing. The lower the food price, the lower the product processing cost. The higher the food price, the higher the product processing cost and the lower the profit.
With the continuous influx of new grain into the market, the purchaser's purchase volume is limited and it is bound to be sold. In the period of low food prices, only by selling can we get more capital for acquisition. Therefore, processors also understand the psychology of buyers, and will lower the price when buying grain from buyers, thus reducing the production cost and lowering the price from the terminal.