Corn processors prioritize protein as margin for starch business falls

Industrial corn demand is getting new attention as starch margins fall to record lows. 

During 2021 and 2022, corn starch was priced 300-500 yuan per ton higher than corn. Due to export restrictions and changes in processing, the premium fell to less than 60 yuan per ton in November. 

Part of the change was due to higher prices for higher protein products such as corn germ meal and corn oil. 

In the soybean crushing industry, companies will often discount products, or create a premium for a product, depending on local demand. For example, if meal prices are low, companies may try to raise the prices for their soy oil. 

In an analyst note this week, a domestic brokerage made the argument that clients should bet that the premium of corn starch increases relative to corn futures. 

Currently, industrial corn processors are prioritizing the production of higher protein coproducts such as corn germ meal, and discounting products that cannot be exported such as starch.