At present, the market is generally bullish on the prices of wheat, corn, barley and other food crops, and the increase depends on the progress of the subsequent geopolitical situation. It is expected that the global grain, oil and grease market will be stronger in the future.
On March 9 local time, the US Department of Agriculture released the monthly global agricultural supply and demand forecast report. It is expected that the global wheat settlement inventory will increase by 3.3 million tons to 281 million tons compared with the previous month. Affected by the news, the most active may contract in the wheat market on the Chicago Futures Exchange fell 6.61% to $12.015/bushel.
Recently, the supply concerns caused by the situation in Russia and Ukraine have led to increased fluctuations in Shenzhen Agricultural Products Group Co.Ltd(000061) prices, and the global food prices announced by the FAO hit a new high in February. According to the data released by FAO on March 4, the average food price index of FAO in February was 140.7 points, up 3.9% month on month and 20.7% year-on-year.
Specifically, due to the supply interruption in the Black Sea region, the market's concern about the reduction of sunflower oil exports pushed up the prices of sunflower oil, soybean oil and palm oil. In February, the FAO vegetable oil price index led the rise, with a month on month increase of 8.5%, a record high. In the case of supply disruption affecting relevant grain exports, the FAO grain price index rose by 3% month on month, of which the international wheat price rose by 2.1% and the international corn price rose by 5.1%.
Before the geopolitical situation pushed up the relevant Shenzhen Agricultural Products Group Co.Ltd(000061) prices, the international food prices had shown an upward trend due to the superposition of factors such as the impact of the epidemic on the supply side and monetary easing policy. Fan Shenggen, President of the global food economy and Policy Research Institute, told the 21st Century Business Herald that since the factors affecting international food prices will not be completely eliminated in the short term, international food prices are expected to rise further in the future. However, considering that all countries have consistent demands for reducing inflation and the Federal Reserve has begun to tighten monetary policy, there is limited room for the rise of food prices in US dollars, and it is unlikely to see a sharp rise in 2021 in the short term.
Shenzhen Agricultural Products Group Co.Ltd(000061) price fluctuation intensifies
Recently, the uncertainty caused by the situation in Russia and Ukraine has aroused market concerns, and the prices of wheat, corn and other food crops have increased significantly.
Yu Lanlan, a Shenzhen Agricultural Products Group Co.Ltd(000061) researcher of CCB futures, told the 21st Century Business Herald that the current Shenzhen Agricultural Products Group Co.Ltd(000061) prices of oil, corn, wheat and other Shenzhen Agricultural Products Group Co.Ltd(000061) prices have included the risk premium brought by geographical factors. The key to whether the subsequent price rise trend continues or not lies in the stability of the situation in Ukraine.
Fan Shenggen said that in addition to the limited export of wheat and corn in the Black Sea region, which pushed up food prices, the rise of global oil prices was also an important factor driving up food prices. This is mainly reflected in the following aspects: first, the rise of oil price increases the cost of production and transportation; Second, it leads to an increase in the demand for bioenergy with corn and other grains as raw materials, thus pushing up food prices. In addition, the price fluctuation of potash fertilizer, phosphate fertilizer and other chemical fertilizers has exacerbated the instability of grain prices.
Wang Yubin, School of economics and management, China Agricultural University, told reporters that at present, the market is generally bullish on the prices of wheat, corn, barley and other food crops, but the increase is not easy to judge. It depends on the progress of the follow-up geopolitical situation. At the same time, the relevant trading partner countries are expected to take a series of measures to stabilize the price impact.
In fact, long before geographical factors triggered Shenzhen Agricultural Products Group Co.Ltd(000061) price fluctuations, international food prices showed a rising trend. Wang Yubin told reporters that in the past two years, grain prices were mainly affected by the impact of the epidemic, supply, drought and other extreme weather, and the superposition of multiple factors such as output and capital speculation.
He analyzed that the international grain production and marketing trade pattern was distorted in the grain harvest season in 2020 due to the impact of the epidemic and the speculation of large grain enterprises. Some large grain enterprises had a large backlog of grain. Therefore, the market performance in the grain harvest season in 2021 was cold and grain prices were bearish, resulting in increased losses. With the gradual reduction of inventory, the impact of adverse factors such as weather and the cyclical fluctuation of production, the expected output is bearish and the price rises. In addition, the sudden geopolitical risks further distort the market supply and demand and price.
As the evolution of the situation in Russia and Ukraine is uncertain, the impact of geographical factors on relevant Shenzhen Agricultural Products Group Co.Ltd(000061) exports is also uncertain. Yu Lanlan believes that at present, the export of relevant ports is basically stagnant, and some countries are worried about food security. In the case of insufficient global oil supply, the original demand in the Black Sea region has shifted to alternative oils and fats such as palm oil in Southeast Asia and soybean oil in South America, which has exacerbated the shortage of palm oil, soybean oil and other oils and fats, and it is difficult to find sufficient substitutes, so the demand can only be allocated through high prices.
On the whole, Yu Lanlan expects that the global grain, oil and grease market will be strong. In the future, the dynamics of spring sowing in Ukraine will disturb the global grain market. If the geographical situation has a substantial impact on planting, there may be a broader and longer-lasting Shenzhen Agricultural Products Group Co.Ltd(000061) price rise.
food security needs to be jointly maintained
Grain has the characteristics of rigid demand and volatile price. Under the influence of geographical situation and other factors, what is the risk of food supply in the future?
Wang Yubin said that considering that Russia and Ukraine are both major grain producers and exporters, if the geographical situation further escalates, it will affect the management and protection of Winter Wheat in spring and the sowing of corn and other grains to a certain extent, which may lead to local food supply shortages. If the geopolitical situation eases before the sowing date of management and protection, the impact on relevant Shenzhen Agricultural Products Group Co.Ltd(000061) prices will also weaken soon.
Fan Shenggen pointed out that Russia and Ukraine have certain influence in international grain trade. In terms of proportion, the total wheat output of the two countries accounts for about 15% of the global output, while the export accounts for 28.5% of the global export volume; The total output of corn of the two countries accounts for 4.7% of the total global output, while the export accounts for 18.6% of the global export volume. This means that the international supply of relevant food crops in the two countries will directly affect international prices. If the geopolitical situation continues to escalate and impact food prices, countries will take corresponding measures accordingly, and the pattern of global food trade may be reshaped.
To some extent, the local emergency situation in the world highlights the importance of food supply and demand stability and food security. Wang Yubin suggested that all countries should pay full attention to food production, advocate and stabilize food consumption, and jointly maintain a peaceful and stable international trade environment.
Objectively speaking, the situation in Russia and Ukraine has a great impact on countries that rely on food imports and have a high proportion of low-income people. The continuous rise in food prices may lead to greater living pressure for people who spend 50% - 60% of their income on food in countries such as Africa, the Middle East and South Asia. In this regard, fan Shenggen pointed out that food security is a global issue. In the future, cooperation and exchanges among countries in food relief to poor countries and trade policies restricting exports need to be improved.
