Mild rise in agricultural product prices will become normal

Agricultural prices have recently regained their upward momentum and spread to the downstream food and beverage industry. The industry believes that with the tight supply and demand backdrop, with the increase in the cost of planting and the increase in the minimum purchase price of grain, the moderate increase in the price of agricultural products represented by grain will become the norm. However, large varieties of white sugar, cotton, etc. that have gained a lot in the early stages are expected to show wide fluctuations in 2011.

Grain prices will continue to increase moderately, according to the "National Agricultural Products Wholesale Market Information Network" of the Ministry of Agriculture. The total wholesale price index of agricultural products was 184.9 on January 17, 2011. The year-to-date of 2011, the total wholesale price index for agricultural products rose by 4%, 2010. The annual increase was about 8%.

According to the data from China Grainnet, in 2010, wheat prices rose by about 7%, rice prices rose by about 13% (the price of japonica rice rose by 19%), corn prices rose by about 15%, and soybean prices rose by 6%. In the past two weeks in 2011, the above grain varieties continued to remain strong. The corn price hit a record high of 2017.83 yuan/ton, and the price of japonica rice reached a record high of 2,171 yuan/ton.

Industry insiders believe that the rise in the price of agricultural products represented by grain in China is related to the increase in costs and the tightening of supply and demand. It is also related to the strong inflation expectations and the continued strength of the external agricultural product market. The U.S. Department of Agriculture recently released a report that drastically lowered the production and ending stocks of soybeans, corn and other varieties.

However, in the context of increasing domestic grain production year after year, the main grain varieties represented by wheat and rice are basically balanced. National Bureau of Statistics data show that in 2010, China's total grain output reached 54.41 million tons, an increase of 2.9%. Since 2004, China has been harvesting grain for seven consecutive years. Since 2007, the total grain output for four consecutive years has exceeded one trillion yuan.

Regarding the trend of agricultural product prices in 2011, the industry is almost unanimous in its opinion that the main agricultural products represented by grain will continue to rise moderately in the coming year. The tight global food stocks and loose global monetary policies have created conditions for agricultural production.

Analyst Qin Jun from Guotai Junan said that the accelerated increase in labor costs in 2010 has led to a sudden increase in the cost pressures of all labor-intensive industries. Coupled with farmers’ pro-cyclical grain storage and hot money speculation, food prices are apt to rise and fall, and it is expected that prices of agricultural products will be mild in 2011. rise.

Bo Li Securities analyst Wu Li also believes that due to the increase in planting costs, raising the price of agricultural product valuation center, coupled with tight supply and demand, farmers reluctant to sell, etc., is expected in 2011 the price of agricultural products rose about 10% year-on-year.

The prices of some agricultural products may fluctuate at a high level. Industry experts believe that due to the increase in consumption and the decrease in production and supply during the Spring Festival, coupled with the recent impact of disaster weather such as low-temperature freezing rain and drought throughout the country, the prices of edible agricultural products are unlikely to fall in the near future. However, the varieties of white sugar, cotton, etc. that have gained a lot in the early stages are expected to fluctuate in 2011.

Compared with the moderate increase in the prices of large varieties such as food, the prices of some agricultural products such as sugar and cotton rose staggeringly in 2010. In 2010, sugar rose as high as 35% and cotton rose as high as 85%. Under the effect of a series of regulatory measures, the prices of cotton and sugar have declined to a certain extent, but at the beginning of 2011, the upward trend has reappeared.

At the same time, the increase in the price of basic agricultural products has also played an increasingly important role in downstream transmission. The price increase of agricultural products has gradually spread to the people's table. The prices of agricultural and sideline products such as dairy products, alcoholic drinks, beverages, and meat products have risen almost all the way, bringing about extreme inflation in China. huge pressure.

Hua Xiaotai United Securities analyst Jiang Xiaodong said that the best performing price in the bull market is the most vulnerable varieties of agricultural products, such as cotton and sugar. Continuing downward adjustments in production expectations led to the continued attractiveness of the supply and demand pattern for the continued formation of funds. As a result, these varieties are among the top gainers in this agricultural commodity bull market.

According to data released by FAO, the global food price index reached the highest point in the last 20 years in December 2010, and the increase in the index was mainly driven by the increase in the prices of edible oil, grains, sugar and meat. The prices of these foods may remain high or even continue to rise.