As of 3:20 a.m. Beijing time on February 26 (closing on February 26 local time), a number of grain contracts on the Chicago Mercantile Exchange and the pan European exchange fell rapidly after jumping. China’s strong wheat contract has changed its placid trend, rising for two consecutive days, and corn and soybean contracts have increased to a certain extent. Some experts said that geopolitical events are only the fuse, and there are still many factors behind them to jointly push up grain futures contracts. Some analysts said that China’s food security strength is strong, but feed, breeding, grain and oil enterprises that rely on imported grain for deep processing still need to take countermeasures to prevent the short-term impact effect of the international marketP align = “center” (source: China stock market news)
food supply chain disturbed
As of 6:00 on February 25, Beijing time, the grain contract price of the Chicago Mercantile Exchange soared in a large area. Among them, the wheat futures contract rose by 5.65%, once rising to 934.75 cents / bushel, the highest level since July 2012. Corn futures contracts rose by 5%, once rising to 716.25 cents / bushel, the highest level since June 10, 2021. Soybean futures contracts rose 4.7%, once rising to 1756 cents / bushel, the highest level since 2012. Soybean meal futures contract rose 3.8%, soybean oil futures contract rose 5.67%. Wheat futures rose sharply after the opening of the pan European exchange. The main contract of wheat futures rose 14% to 335.00 euros per ton, and corn futures contract rose 11% to 296.25 euros per ton. International financial institutions generally believe that geopolitical events are the main reason for the rise of large-scale contracts.
On the Chinese side, the China stock market news choice terminal shows that as of the closing at 3:00 on February 25, Beijing time, the main contract of strong wheat has changed its usual calm performance, rising for two consecutive days, up to 3293 yuan per ton, the main contract of corn once rose to 2883 yuan per ton, and the main contract of bean once rose to 6512 yuan per ton, The main force of soybean meal once rose to 4202 yuan per ton. Different from the international market, China’s grain futures contracts have shown an obvious trend of rising and falling. As of the closing, some varieties such as qiangmei have returned most of their gainsP align = “center” strong wheat’s main contract prices rose and fell (source: China stock market news)
Professor, Department of international trade, Hunan University Xiao Hao, the doctoral supervisor, analyzed the above situation: “At present, global grain prices are at the highest level in a decade, and the global supply chain is fragile. Any move will bring huge risks. Geopolitical events are only the trigger for the collective surge of grain futures contracts, and the driving factors behind it are diverse. There is a gap in the supply of bulk energy such as international oil and natural gas, which drives key agricultural materials such as pesticides and chemical fertilizers The soaring prices are obviously unfavorable to major grain exporting countries. In addition, La Nina and El Nino phenomena occur frequently, and the global market has doubts about the stability of the grain supply chain. ” He further said, “there has been a pulse trend in China’s grain futures market, which reflects that China’s grain basic market is firm, local governments pay close attention to spring farming production, and basically do not support the long-term sharp rise in China’s grain futures spot market.”
On February 25, the State Grain and material reserve bureau held a press briefing. It was introduced that China’s grain market has sufficient supply and stable operation. From the current autumn grain purchase price, since entering the peak purchase season, the rice price has been mainly stable; The price of corn is relatively stable and rising slightly; Domestic soybeans went out of the independent market and the price remained high. “In the face of the current complex situation of the grain market outside China, we have both sufficient food sources, policy tools and rich experience accumulated in practice. We will pay close attention to the market dynamics, take timely targeted measures according to the changes of the market and the needs of regulation and control, and make every effort to ensure the supply and price stability of grain.” Qin Yuyun, spokesman of the State Grain and material reserve bureau, said.
feed industry impacted
The reporter found that Russia and Ukraine are both large agricultural countries and major suppliers of wheat, corn and sunflower oil. Among them, the two countries account for 29% of global wheat exports, 19% of global corn exports and 80% of global sunflower oil exports. In 2021, Russia exported 32.92 million tons of wheat and 620 tons of barley. Ukraine’s corn export volume ranks fourth in the world, accounting for about 16% of the world’s total export volume and 80% of the country’s corn output. The export objects of the above two countries are mainly Egypt, Turkey, Bangladesh and the Middle East. China also imports some grain from the above two countries, which is mainly used in the feed industry.
From February 21 to February 26, some feed production enterprises such as Hunan Changye and Dongguan Zhengda issued price increase letters, successively raising the prices of raw pigs, poultry and aquatic feed. Each ton of teaching trough materials is increased by 100 yuan to 150 yuan, and each ton of concentrated materials is increased by 200 yuan to 250 yuan. Previously, in January 2022, New Hope Liuhe Co.Ltd(000876) , Tangrenshen Group Co.Ltd(002567) , Tongwei Co.Ltd(600438) , Hunan Zhenghong Science And Technology Develop Co.Ltd(000702) , etc. have raised their feed prices.
Tangrenshen Group Co.Ltd(002567) Board Secretary sun Shuangsheng told reporters, “the price adjustment of feed production enterprises is a market-oriented behavior. Whether there will be price change in the next step still needs to comprehensively consider the raw material cost, production cost and downstream willingness. Feed enterprises with good comprehensive cost control, ready raw material inventory and accurate prediction of the market in advance have certain advantages in the market.” He further added, “In recent years, the prices of feed raw materials such as corn and soybean meal have increased greatly, which has led to the continuous rise of pig feed prices. In terms of feed business, we hedge through the futures market to avoid the risk of price fluctuation of feed raw materials such as corn and soybean meal, control procurement costs, and reduce the pressure caused by the rise of feed raw material prices by adjusting feed formula; in terms of breeding business , we mainly reduce the pressure of rising feed prices by optimizing feed formula and implementing precision feeding. “
Professor Li Wei of Plant Protection College of Hunan Agricultural University analyzed the above situation: “China’s grain self-sufficiency rate is high, its inventory is substantial, its import sources are extensive, and its basic market is stable. There is no need to worry too much about the short-term impact of the international market. However, some feed, breeding, grain and oil enterprises along the coast, along the border and along the river may have the problems of single procurement channels and single import sources. It is necessary to carefully study the short-term impact effect of geopolitical events on the international grain market and should Strive to expand procurement channels, improve import structure, do a good job in hedging, hedge price impulse risk, and transmit correct and clear price signals to the Chinese market. On the other hand, it is also necessary to prevent some importers, dealers, speculators and we media from deliberately exaggerating the impact of geopolitical events and carrying out conceptual speculation, bid up grain prices and hoarding speculation. “
