(Economic Observation) Looking forward to 2022: International food prices hit a 10-year high, how will Chinese food prices go?

  China News Service, Beijing, January 2 (Reporter Chen Su) The November 2021 International Food Price Index released by the Food and Agriculture Organization of the United Nations (FAO) rose 27.3% year-on-year, setting a 10-year high.

Against this background, will China's grain prices be affected?

How will China's grain prices go in 2022?

  According to data released by the National Bureau of Statistics of China, China's grain output in 2021 exceeded 1.3 trillion jin for the seventh consecutive year, reaching a new high of 1.3657 trillion jin.

At the same time, China’s grain reserves are sufficient. According to official data, China’s total grain stocks are currently at a historically high level.

Take wheat as an example. In the context of successive bumper harvests, inventories have continued to increase, and it can currently meet the consumption needs of the Chinese for one and a half years.

  However, driven by factors such as rising international food prices and the prices of agricultural production materials, China's food prices have also seen a trend of rising volatility, especially corn prices have risen significantly.

According to statistics from the Ministry of Agriculture and Rural Affairs, from January to June 2021, the average wholesale price of corn in the production area increased by 44% compared with the average price in the first half of 2020, and the average price of rice and wheat increased by less than 10% year-on-year.

  Analysis predicts that in the future, international food prices will run at a high level.

Abbasan, a senior economist at the Food and Agriculture Organization of the United Nations, believes that international food prices may not fall in the short term.

Rabobank also pointed out in the report that in 2022, inflation will not be temporary in the international agricultural product market, and the three major problems of supply chain disruption, extreme weather, and fertilizer prices will not be significantly alleviated next year.

  Under the influence of the new crown pneumonia epidemic and trade protectionism, the international food supply chain has continued to be impacted, the international food pattern has been profoundly changed, and the stability of China's food imports is facing challenges.

Will international grain prices be further transmitted to China and affect China's grain prices in 2022?

  From the perspective of rations, experts generally believe that China's wheat and rice prices will remain stable in 2022.

  Jiang Wenlai, a researcher at the Institute of Agricultural Resources and Regional Planning of the Chinese Academy of Agricultural Sciences, told a reporter from China News Agency that from the perspective of supply, China has had a bumper crop year after year, and China has always regarded "absolute ration security" as the bottom line.

In the face of the complex international grain situation, China’s Central Economic Work Conference and Central Rural Work Conference this year have placed more emphasis on food security, emphasizing that ensuring the supply of primary products is a major strategic issue. Hold it firmly in your own hands.

In 2022, China's overall grain supply is relatively stable, and it is expected to improve.

From a demand perspective, although China's grain demand will continue to grow for some time in the future, the overall grain demand will be relatively stable, and there will not be a large increase in 2022, and the overall grain will still be in a tight balance.

  Li Guoxiang, a researcher at the Institute of Rural Development of the Chinese Academy of Social Sciences, said that the basis for stable operation of China’s ration prices is relatively good. Chinese officials attach great importance to summer grain production, and a bumper summer grain harvest may lead to a fall in wheat prices."

  Due to the large increase in corn prices and the continuous increase in China's corn imports, the trend of corn prices has attracted much attention.

  Li Guoxiang said that the current corn price in China has fluctuated at a high level, but it is unlikely that it will continue to rise in the future.

The main reason is that the increase in international corn prices has led to increased corn production. International corn prices have stabilized, and domestic corn production has continued to increase. In addition, with the global overcapacity of rice production, excess rice may enter the feed industry. Under the influence of substitution , Corn and other feed grain prices will also drop.

  In 2021, affected by the high price of corn, farmers' enthusiasm for planting is high, and the planting area has increased compared with the previous year.

According to calculations by relevant agencies, China's corn planting area will reach 43.32 million hectares in 2021, an increase of 2.06 million hectares year-on-year, an increase of nearly 5%.

  China's soybeans and oil crops are relatively dependent on imports. Among them, soybeans are more than 80% dependent on imports. How will soybean and oil prices develop?

  Li Guoxiang said that the major price increases in the world are wheat and oil. China is fully self-sufficient in wheat. Soybeans and oilseeds will continue to be imported. However, China is expected to increase soybean and oilseed production in 2022 and reduce its dependence on imports.

  Faced with an increasingly complex external environment, Chinese senior officials recently proposed to "expand soybeans and oilseeds" when laying out food security, which is regarded by the outside world as a measure to improve China's ability to resist external risks in food security.

  Jiang Wenlai said that in 2022, the risk of drought and flood disasters in China's main grain production areas still exists. In addition, the production costs of land rent, pesticides, fertilizers, seeds, and labor continue to increase. These two factors are likely to push up food prices.

Officials need to pay attention to the trend of agricultural production materials and prepare for extreme weather disasters.

  Regarding the transmission effect of international grain prices, Li Guoxiang said that to guard against malicious speculation by the rise of international grain prices, grain traders should pay attention to identifying wrong price signals to avoid misjudgment of market conditions and reluctance to sell and increase reserves.

"China's grain demand is relatively stable, and the overall domestic supply next year will be only a lot more, and the dependence on imports will also decrease. It is recommended that traders do not rush to buy grain internationally to avoid losses." (End)