China corn starch prices likely to fall in Q4 on new-season supply

On the futures side, the settlement price of the most-traded corn starch contract at Dalian Commodities Exchange (DCE) was about Yuan 2,507/tonne at the beginning of the year. An upward trend began in February, with the price rising by Yuan 145/tonne that month to Yuan 2,659/tonne. The upward momentum continued in March to Yuan 2,741/tonne, and on April 23 it hit the year's high of Yuan 2,829/tonne. After that, the market entered a downward channel, falling to Yuan 2,682/tonne in May, fluctuating within the Yuan 2,687-2,741/tonne range in June, gradually moving lower in July-August, and falling back to Yuan 2,600/tonne by the end of August.

Entering September, under pressure from expectations of a concentrated new-season corn supply, the market fell at an accelerated pace, with the corn starch futures settlement price dropping to Yuan 2,454/tonne on September 15, a new low for the year. Calculated from the April high, the most-traded DCE corn starch contract cumulatively fell by about Yuan 375/tonne, a decline of about 13.3%.

On the spot side, corn starch spot prices moved in the same direction as futures but differed in magnitude and timing. For instance, the corn starch spot prices in Shandong were about Yuan 2,730/tonne at the beginning of the year, rose sharply in March to the year's high of Yuan 2,970/tonne, then fluctuated downward from April, fell below Yuan 2,900/tonne in July, reached Yuan 2,800/tonne by the end of August, and further dropped to Yuan 2,700/tonne in mid-September, a cumulative decline of about Yuan 270/tonne from the year's high, or about 9.1%.

Entering the fourth quarter, the core variables in the corn starch futures and spot market are the cost decline brought by the concentrated marketing of new-season corn and structural changes in downstream demand. Based on historical patterns and the current futures-spot structure, the following judgments are made regarding subsequent corn starch futures prices and basis trends.

First, corn starch futures may stabilize first. Since September, the most-traded DCE corn starch contract has fallen rapidly from Yuan 2,591/tonne to Yuan 2,454/tonne, reflecting the bearish expectations of new grain marketing in advance. Referring to past seasonal patterns, corn prices usually fall by Yuan 160-300/tonne during the new-season corn marketing period, while starch declines are usually only 40%-50% of corn's, and processing profits accordingly turn from losses to gains. The current corn starch futures price near Yuan 2,450/tonne has gradually approached the cost support zone, and room for further deep declines is limited. In the fourth quarter, futures are expected to repeatedly bottom out at low levels and stabilize first.

Second, the basis will fall from highs but still maintain a deep premium over futures prices in consumption regions. The current basis in major consumption regions is at a high for the year. As new corn is marketed and spot corn starch follows downward, spot prices in consumption regions still have room to catch down. However, supported by downstream stocking for the Mid-Autumn Festival and National Day and by the rigidity of prices in consumption regions, the decline in spot prices there is expected to be smaller than the earlier decline in futures, and the basis is likely to gradually converge from a high level to around Yuan 200/tonne. The overall operating range in the fourth quarter is expected to be Yuan 180-250/tonne.

Third, the basis in major producing regions will fall significantly and return to near parity. The current basis in producing regions is already at a high for the year, with a rare period of spot prices at a high premium to futures. In the fourth quarter, major producing regions, as the main battleground for new grain marketing, will face the most concentrated spot supply pressure. The decline in spot prices there is expected to exceed that of futures, pushing the basis to fall rapidly from a high level and return to parity or even a slight discount (Yuan 0 to -50/tonne). This is the most certain main line in fourth-quarter basis trends.

Fourth, corn starch futures-spot convergence will push the basis to narrow. As the main corn starch futures contract approaches delivery, futures and spot prices will tend to converge, and the basis in both consumption and producing regions will return to their respective reasonable centers. Consumption regions, supported by their consumption-region attributes, will have a relatively high basis center; producing regions, constrained by their producing-region attributes, will have a relatively low basis center or even a discount.

Overall, from January to September 2026, corn starch futures and spot prices, while moving in the same direction, showed the typical characteristic of "futures leading, spot lagging". 

Looking ahead to the fourth quarter, the concentrated marketing of new-season corn will become the dominant variable. Futures are expected to bottom out at low levels, spot prices to catch down. It is recommended to pay attention to the pace of new grain marketing, the realization of downstream stocking for the two festivals, and basis trading opportunities during the futures-spot convergence process.