Urgent! The global food crisis is approaching the UK shot! Asian rice to soar? The continuous rise in May is still a "depression" for prices

Is Asian rice about to rise sharply?

At present, Asian rice, which has risen for five consecutive months, is still the price depression of global food. The main export rice of Thailand, the world's main producing country, has increased by only 15.63% so far, while the international prices of wheat, corn and soybean have increased by 48% compared with the beginning of the year. , 30%, 28%, obviously the increase of rice is obviously weak.

Can this depression continue to rise? In fact, Thailand and Vietnam, the two biggest rice exporters, are still very cautious about rising prices because of fears that "the fire at the city gate will affect Chiyu." The U.S. Department of Agriculture's June report raised its forecasts for wheat, soybeans and corn, which helped ease global food tensions.

On June 13, the 170th meeting of the Council of the Food and Agriculture Organization of the United Nations opened. Previously, the organization's "2022 Hunger Hotspots Report" warned that multiple food crises were looming. The UK said it would develop its first national food strategy, focusing on increasing domestic production to promote food security.

Global rice prices rose for 5 consecutive months, still a price "depression"

In the international price of wheat and other prices continued to soar, the pressure on international rice prices increased. According to the United Nations Food and Agriculture Organization, the global rice price index has risen for the fifth consecutive month.

At present, international rice prices are still far lower than other grain prices. As the main international benchmark, the quotation of 100% B-grade white rice in Thailand has reached 479.3 US dollars / ton, and the increase during the year has also reached 15.63%. As of June 13, 2022, the international CBOT wheat, corn, and soybean prices have risen by 48%, 30%, and 28%, respectively, compared with the beginning of the year. Obviously, the increase in rice is obviously weak. From a regional perspective, the growth rate of Thai rice products is mainly between 16% and 18%.

Earlier, at the end of May, Thailand and Vietnam negotiated an agreement to increase rice export prices, with the goal of raising rice prices, increasing farmers' incomes and enhancing the bargaining power of the global market. For more than 20 years, the price of rice in the global market has been at a low level of around US$300-400 per ton, while production costs have continued to rise, said Alongkorn Ponlaboot, advisor to the Minister of Agriculture and Cooperation of Thailand.

Thailand and Vietnam, the world's major rice exporters, will have greater bargaining power to control the global rice trade by raising prices together, and rice farmers in both countries will also benefit. The two sides agreed in principle to discuss related issues in more detail when the Thai delegation participates in the Vietnam Agricultural Technology Expo in August. Thailand and Vietnam together account for a quarter of global rice trade. However, analysts predict that the possibility of joint price increases between the two countries is low, because this will directly drive up their domestic rice prices and will not help ease domestic grain prices.

On June 13, the 170th meeting of the Council of the Food and Agriculture Organization of the United Nations opened. According to the agenda, the meeting will last for 5 days, and the impact of the Russian-Ukrainian conflict on global food security is one of the main topics. Earlier on June 9, the United Nations Food and Agriculture Organization released the latest "Food Outlook" report, predicting that this year's global food imports will reach a record 1.8 trillion US dollars, but less food will be available. Food markets are likely to tighten further, with food import bills hitting record highs, given soaring agricultural input prices, weather concerns and heightened market uncertainty due to the conflict in Ukraine, FAO economists said.

The U.S. Department of Agriculture reported in June that Russian exports this year were raised 1 million tons to 40 million tons, which would be the second-highest on record. Russia's supply is expected to increase in 2022/23 and its export prices are more competitive than most other exporting countries. However, global ending stocks for 2022/23 are lowered 200,000 tons to 266.9 million tons, which would be the lowest in six years.

The global food crisis is looming, and the UK will formulate its first national food strategy

On June 12, local time, WTO Director-General Iweala said at the 12th WTO Ministerial Conference that the WTO must now deal with the food crisis.

Iweala believes that the impact of droughts, floods, heat waves and other extreme weather events, combined with supply chain bottlenecks caused by the new crown epidemic, has led to global food prices rising, a situation exacerbated by the Russian-Ukrainian conflict.

According to data from the United Nations Food and Agriculture Organization, compared with last May, the global price of wheat has risen by 56%, the overall price of cereals has risen by nearly 30%, and the price of vegetable oil has recently risen by 45% year-on-year. In terms of inventory, the global inventory sales ratio of wheat, corn, and rice in 2021 will all decline significantly from pre-epidemic levels. The international grain problem was also reflected in the price data in May. The prices of domestic grain products and edible vegetable oil rose by 3.2% and 3.8% respectively compared with the same period last year.

Economies around the world are facing inflationary pressures, with higher food and energy prices hitting low-income people the hardest, Iweala stressed. While Russia and Ukraine account for less than 3 percent of world merchandise trade, they are particularly prominent in exports of key food items. In 2019 global trade, 25% of wheat and 15% of barley came from Russia and Ukraine. Without action at the national and international levels, low-income countries face disastrous situations, Iweala said.

On June 6, the United Nations World Food Program and the United Nations Food and Agriculture Organization jointly released the "2022 Hunger Hotspots Report". Multiple food crises are looming; sudden hunger in 20 hunger hotspots is expected to worsen between June and September 2022, the report warns. In May, the United Nations Food Programme stated that "humanity is facing the greatest food crisis since World War II".

On June 13, the UK said it would develop its first national food strategy, focusing on increasing domestic production to promote food security. According to reports, the UK will invest £270 million in agriculture by 2029. Prime Minister Boris Johnson said the strategy would support farmers and help protect food supplies from future economic shocks.

"Utilizing new technology and innovation, we will grow and eat more of our own food - creating jobs across the country, boosting economic growth and ultimately helping to reduce price pressures," Johnson said in a statement.

The overall situation of China's wheat harvest has been determined, and the CPI may rise further in the second half of the year

In the face of the sharp rise in the international grain market, the State Administration of Grain and Material Reserves stated on June 13 that China's wheat production continued to increase and was less affected by the international market. Recently, Wang Xiaohui, chief analyst of the National Grain and Oil Information Center, analyzed that the overall situation of this year's wheat harvest has been determined.

Wang Xiaohui said that the current progress of summer grain harvesting is fast, and the weather is mainly fine during the summer harvest. The machine harvesting progress of wheat in the main producing areas exceeds 70%, and the summer harvest will basically end in about a week. warehouse. From various reflections, the rare autumn flood weather last year and the large-scale delay in winter wheat planting did not affect the yield. The wheat yield per unit was significantly better than that of the previous year, and the quality was the best in recent years. The overall situation of the bumper harvest has been determined.

Xie Yunliang, an analyst at Cinda Securities, believes that my country's main grains are less dependent on foreign countries and have sufficient reserves. It is expected that the impact of the international food crisis on my country will be limited. From the perspective of import dependence, my country's rice, wheat and corn imports account for a relatively low proportion of the total domestic consumption, which can basically achieve self-sufficiency; the reserves of the three staple grains are also relatively sufficient. It should be noted that some agricultural products in my country are highly dependent on imports. For example, the import dependence of soybeans exceeds 80%, and the import dependence of sugar and rapeseed oil is also at a high level. These crops are affected by changes in international food prices. will be more sensitive.

Xie Yunliang believes that due to the resonance of the "oil, grain and pig", the domestic CPI is likely to break 3 in the second half of this year. There are two ways for the transmission of food prices to the CPI. One is that the rise in food prices can directly drive the CPI, and the weight of food in the CPI is 2 According to this weight, the direct pull of grain price increase on CPI in May this year was about 0.06%; second, the cost of feed accounted for 60%-70% of the cost of pig breeding, and grain can be pushed up by raising the cost of raising pigs. pork prices. Since April, pork prices have stabilized and rebounded, which to a certain extent is related to the continuous rise in the prices of soybean meal, corn and other grains. "We expect that in the second half of the year, the resonance of oil, grain and pigs will push up the year-on-year CPI reading, and the CPI is likely to break 3."

Article source: Brokers China