Recently, affected by the rising international food prices, the prices of some types of grain, oil and “vegetable basket” products in many farmers’ markets in China have also fluctuated and increased, especially the price of flour and soybean oil. How much impact will the current round of agricultural and sideline product price hikes have on the Chinese “dining table”? How does China “stabilize”?
”In the past two weeks, flour has risen very quickly. A 50-pound bag of flour has risen from 110 yuan to 120 yuan,” Ms. Liu, who runs a grain and oil store in Yantai, Shandong, told a reporter from China News Agency on the phone. Recently, the price of flour has risen significantly, and at the same time, soybean oil for restaurants has also risen. A barrel of cooking oil has risen from 120 yuan to 170 yuan.
Data from the official website of the Development and Reform Commission of many places shows that since late February, flour prices in many places have risen to varying degrees. For example, the average price of standard powder in Zhengmi Road Farmers Market in Zhengzhou City was 2.48 yuan per kilogram on March 12, up 24% from a week ago.
Experts pointed out that this round of higher grain and oil prices is mainly due to international factors: on the one hand, it is affected by the continuous rise in international grain prices since last year, and on the other hand, it is affected by the current situation in Russia and Ukraine.
”The recent rise in the prices of domestic flour, wheat, soybean oil and other agricultural products is mainly related to the international situation. Russia and Ukraine are the world’s major crop exporting countries. The tension between the two countries has led to an increase in international grain prices, which is then transmitted to the country.” Li Guoxiang, a researcher at the Development Research Institute, told a reporter from China News Agency.
In recent years, affected by factors such as the new crown pneumonia epidemic and extreme weather, international food prices have continued to rise, reaching a new high in the past ten years by the end of last year. Since the beginning of this year, the price of wheat futures on the Chicago Board of Trade has risen by more than 70%, hitting a new high since March 2008, and the prices of corn and soybean futures have risen by about 30% and more than 25% respectively this year. Since the outbreak of the conflict between Russia and Ukraine, international grain prices have continued to soar. On March 17, the continuous wheat contract on the Chicago Board of Trade reached $10.57 per bushel, a cumulative increase of more than 30% compared to late February.
China’s wholesale price index for grain and oil products rose to 116.05 on March 17 from 113.60 on February 25, data from China’s Ministry of Agriculture and Rural Affairs showed.
In addition, the recent spread of the epidemic in China, coupled with rising oil prices, has pushed up transportation costs, and vegetable prices have also risen in some places, especially in the south. Official data showed that vegetable prices in Shenzhen rose 4.1 percent on March 14 from the previous week.
Li Guoxiang said that recently, affected by factors such as the international situation, the spread of the epidemic, rising crude oil prices and speculation, the prices of some domestic agricultural and sideline products have risen. However, the supply of agricultural products in China is very sufficient, the rations are completely sufficient, and the overall supply of residents’ dining tables is safe.
China’s Ministry of Commerce spokesman said on March 17 that on the 16th, grain prices in wholesale markets in 36 large and medium-sized cities rose by 0.4% from a week ago, while edible oil was flat. The prices of pork and vegetables dropped by 2.7% and 0.3% respectively. Judging from the current situation, the market supply of daily necessities in various places is guaranteed.
Regarding wheat and flour whose prices have risen rapidly recently, Li Guoxiang said that the rise in domestic wheat prices was not only affected by international prices, but last year China’s late planting of some wheat also raised the market’s expectations for wheat prices. In this regard, the government is taking various measures to control the production reduction within a certain range. In addition, China has sufficient ration reserves, and the supply of rations for residents is not a problem.
“The current domestic wheat and flour prices are falsely high, and it is more of a misjudgment and speculation on international price signals. Supply and demand determine the price, and the price of wheat will not continue to rise in the later period.”
Li Guoxiang, a researcher at the Development Research Institute
With the rise in international soybean prices, China’s soybean import costs have increased, pushing the prices of soybean oil and soybean meal higher. China’s soybeans are highly dependent on imports. Some analysts believe that the high price of imported soybeans may lead to an increase in the cost of domestic animal husbandry and the cost of catering.
In response to the future trend of soybeans and soybean oil, Wang Liaowei, senior economist of the National Grain and Oil Information Center, said that the sown area of soybeans in the United States is expected to increase in the new season, the harvesting progress of soybeans in South America is accelerating, the number of short-term supply markets will increase, and the possibility of a correction in international soybean prices will increase. From a domestic point of view, China is vigorously implementing the project to increase the production capacity of soybeans and oilseeds. It is expected that the soybean planting area will increase by more than 20 million mu in 2022. Coupled with the policy-oriented soybean release, the domestic soybean market is guaranteed to supply. In addition, it is expected that China’s pig production capacity will continue to be reduced, and the reduction in feed demand will reduce soybean meal consumption. In summary, there is a possibility of a rapid correction in soybean prices.
In order to stabilize the supply of “vegetable baskets” of agricultural products, commercial departments across China have recently introduced measures to strengthen the supply of important agricultural products, smooth transportation channels, crack down on price gouging, and ensure that market prices are basically stable.
For example, Jilin City implements the daily monitoring and daily reporting system of daily necessities market supply, organizes the supply of goods through multiple channels, starts green channels, and strengthens the protection of important living materials such as vegetables, rice, flour, oil, meat, eggs and milk; Emergency plan for the supply of necessities” to meet the daily basic needs of residents in special circumstances such as the epidemic.
The Ministry of Commerce of China said a few days ago that it will closely follow the relevant situation of market supply guarantee in key areas of epidemic prevention and control, take timely and targeted measures, and do a good job in the “last mile” and “last 100 meters” terminal distribution of daily necessities.
Looking forward to the trend of grain prices in the later period, Li Guoxiang said that although the situation in Russia and Ukraine will bring some uncertainty to international grain prices, China’s grain supply is generally sufficient. In the next few months, there will be more room for manoeuvre in China’s grain prices.
