For the Quarter Ending June 2023
North America
In the second quarter of 2023, the US Corn starch market experienced volatility. The first two months of the second quarter saw steady price gains due to hampered supply and demand dynamics. Due to increased demand from end-user suppliers, there is a moderate shortage of Corn starch on domestic warehouse shelves, leading to price hikes in the market. Trade between Asia and the United States has increased since the zero-resistance policy against COVID-19 was abolished. Also, the production costs of corn starch have increased in recent months due to the rising prices of corn and other inputs. In early June, prices finally began to fall due to weak demand, which led to excess inventory, which forced suppliers to lower their prices. The ongoing economic instability in the US and the rising global inflation rate have also contributed to the decline in demand for corn starch. However, distributors are hesitant to place large orders due to the falling prices. Major players in the market are expected to reduce prices in the coming months further. The price of feedstock corn has also declined due to a surplus supply and increased production. Distributors and suppliers are not restocking their inventories as they are still trying to clear the surplus.
Asia
The Corn starch market in the second quarter of 2023 in the Asia Pacific region showcased a mixed trajectory. The Corn starch market in the second quarter of 2023 in the Asia Pacific region showcased a mixed trajectory. From the commencement of Q2 till the mid of Q2, the Corn starch market showed significant price inflation due to soaring domestic and international orders. The increased production rates to refill the inventories with fresh stock and cater to the upcoming demand market situation remained strong. The supply of Corn starch has been somewhat constrained, due to several factors, including production disruptions in China and the ongoing war in Ukraine. This reduced supply has also contributed to the increase in prices. China's exports saw a better-than-expected market situation as consistent inquiries from the domestic and international markets remained above average. Later with the termination of mid-Q2, the prices fluctuated, and the prices witnessed to deflate significantly. In addition, this price trend was mainly due to a decrease in sales in final consumption areas, and there were no new inquiries from domestic and overseas suppliers. Demand from downstream industries such as food preservatives, plasticizers, and cosmetics has declined in recent months. Due to a large inventory of Corn starch in the warehouse, the supplier had to reduce the price to reduce the existing inventory.
Europe
The second quarter of 2023 saw an appreciation in the European market for Corn starch. As the second quarter began, prices rose due to the gap between the supply and demand side of the market. The price hike was exacerbated by a national surge in domestic inquiries. However, dealer inventories were sufficient to cover gross demand for the month. That said, another factor supporting this increased demand for Corn starch is the appreciation of the Euro against the US Dollar. Unexpected production cut decisions by OPEC+ members also had a positive impact on the market environment. Higher energy costs, higher production costs, and higher transportation costs all contributed to the continued strength of the market. The Euro's strength against the US dollar could make German exports more expensive for foreign buyers and reduce export sales, while imports would become cheaper for German consumers, and domestic inquiries could increase. Inflation in Europe fell to 7.4%, data show. The United States is the world's largest producer of corn, and the drought has led to a decrease in the corn crop. This has reduced the supply of corn starch, which has put upward pressure on prices. Speculative trading has also contributed to the increase in corn starch prices. Speculators are buying corn starch in the hope that prices will continue to rise. This has further increased demand for corn starch and put even more upward pressure on prices. However, it is likely that prices will remain high for some time, as the drought conditions in the United States are expected to continue for several months.
For the Quarter Ending March 2023
North America
The first quarter of 2023 saw an incline in the price trend in the North American market for Corn Starch. Early in January, a positive market attitude for Corn Starch began to emerge across the USA; it persisted through the end of the month as a result of consistent orders from both domestic and foreign purchasers. Additionally, growing feedstock costs had an effect on Corn Starch production costs, which in turn led to high prices. Due to a spike in end-user sector demand in February, Corn Starch prices increased. Strong demand and low inventory levels improved the fundamentals of market trade. In addition, prices for Corn Starch in the USA increased in March as a result of sizable orders from the end-user industry. High demand and limited inventory enhanced the foundations of market trading. Towards the end of the quarter, the prices for Tricalcium Phosphate were assessed at around USD 675/MT for FOB Los Angeles in March.
Asia Pacific
Corn Starch prices in the Asia Pacific region inclined in the first quarter of 2023 for a variety of reasons. Due to robust end-user demand, Corn Starch prices in China climbed sharply in January. After the Lunar New Year break, the market technically restarted on a strong note with an increase in orders from domestic and foreign customers. Because China's market dynamics remained robust in February, the price of Corn Starch kept rising. High end-user industry purchasing activity, rising demand, and falling supply were the primary factors for this growth. Corn starch prices continued to grow in March as China's market fundamentals remained favorable. The main drivers of this growth were high-end-user industry purchasing activity, rising demand, and declining supply. Toward the end of the quarter, the prices were assessed around USD 475/MT for FOB Shanghai in March.
Europe
The Corn Starch market in Europe fluctuated during the first quarter of 2023. Due to an increase in the price of corn feedstock, corn starch prices in Germany, it was increased rapidly through the end of January. Strong market dynamics in the German domestic market also contributed to the price increase. As end-user industry demand remained sluggish, Corn Starch prices declined in February. Positive impulses were also weak in end markets due to the constrained economic environment. Corn starch prices fell in March as end-user sector demand remained low in Germany. Towards the end of the quarter, the prices for Tricalcium Phosphate were assessed at around USD 1130/MT for CFR Hamburg in March.
Overall, corn starch prices in North America were higher than they had been the previous quarter. Stockpiles of domestic corn starch in the US remained low as Q4 2022 approached, and demand for the product increased as the temperature dropped. The market's total supply was constrained. The commodity's domestic market price increased further, supported by demand, rising to USD 615/MT, a gain of 5.1% from the month's beginning. By the end of the year, the price of raw materials, namely corn, had continued to decrease due to efficient stock replenishment in December during harvest season and cautious purchasing on the part of downstream trade organizations. As a result of the reduction of many drawbacks, the market price of corn starch kept declining. On December 30, the average price decreased to USD 608/MT, a decrease of 1.1% from December 1.
Prices for Chinese corn starch varied throughout the fourth quarter. As a result of cost transmission in some parts of the corn starch market in October, which was aided by the continued high price of corn and the small decrease in domestic corn starch inventories, the market's total price for corn starch ran slightly higher. The cost of raw materials was extremely high during November 2022, which was the main cost factor in the production of corn starch. Corn starch demand has increased since inventories were low and market supply was tight. The December price of corn starch was USD 460/MT, a reduction of 2.1%. With the gradual restoration of transportation capacity, import raw material Corn prices somewhat fell, and downstream Corn starch purchases were more cautious. Many negative factors forced certain corn starch makers to lower their prices in response to the corn price.
In the German domestic markets, Corn Starch producers changed their pricing plans for deliveries in the fourth quarter of 2022. Corn Starch prices traded in November 2022 were more on the upward side compared to October 2022. In the German starch market, the situation turned from oversupply to shortage within a very short time. As per trade sources, the demand from end-user pharmaceutical and food industries had started to increase due to the old stocks getting exhausted and due to clear weather; the moisture content in Corn Starch had also started to reach its optimum level. However, Corn Starch prices were traded at a fairly firm price throughout December as there was less supply to the markets due to a shortage of feedstock inventories. Thus, prices increased to USD 1150/MT in December from USD 1015/MT in October, a gain of 15.4% from the quarter's beginning.
