On June 8, the Food and Agriculture Organization of the United Nations announced the global food price index in June. As expected by industry insiders, the global food price index continued to decline in June, which also means that global food inflation is gradually easing! So, if international grain prices have suffered a sharp drop, can they still support high fertilizer prices?
6 The global food price index fell for the third consecutive month
Driven by lower international vegetable oil, grain and sugar prices, the global food price index in June was 154.2 points, a month-on-month decrease of 2.3%, a third consecutive month of decline, although the monthly However, affected by the Russia-Ukraine crisis, concerns about severe weather, strong global demand, and high production and transportation costs, the June index was still 23.1% higher than the same period last year. In addition, dairy and meat prices also increased.
Looking at cereals, 6 the FAO cereal price index was 166.3 points, down 4.1% from May, but still 27.6% higher than in June 2021. FAO estimates in its cereal supply and demand briefing that global cereal production in 2022 will be raised to 2.792 billion tons from the previously given 2.784 billion tons, a decrease of 0.6% in 2021.
Among them, wheat prices fell 5.7% in May, but were still 48.5% higher than a year ago. Wheat prices fell mainly due to improved crop conditions, higher exports from Russia and increased seasonal supplies from new harvests in the Northern Hemisphere. The decline in wheat prices has also been confirmed by the international futures market. International wheat futures prices have fallen by more than 35% from the historical closing price high in March, and have now returned to the level before the outbreak of the Russia-Ukraine crisis.
From the perspective of corn prices, corn prices fell by 3.5% in June. The main reason for the decline in corn prices is that the corn harvest progress in Argentina and Brazil has accelerated, and the supply of corn in the current season has increased. At the same time, the growth conditions of corn in the United States have improved, resulting in international Corn prices are under pressure and falling. The price of corn in the international futures market has fallen by about 30% from this year's peak, and has also fallen to the level before the outbreak of the Russia-Ukraine conflict.
From the perspective of rice prices, due to the reduced supply of basmati rice and strong demand for indica rice and basmati rice , rice prices continued to rise in June. In addition, the prices of barley and sorghum among coarse grains fell by 6.1% and 4.1% respectively.
Looking at vegetable oil, the vegetable oil price index fell by 7.6% in June. Prices of palm oil , sunflower oil , soybean oil and rapeseed oil fell across the board. The main reason for the decline in vegetable oil prices is that in addition to the continued increase in production in the main producing countries during the season, sluggish global import demand is also a major factor. From the international futures market, the price of edible palm oil, the world's largest consumer, has fallen by more than 40% from the record closing price in April to the lowest level in a year.
From the perspective of sugar, affected by the slowdown in global economic growth and improving supply prospects, both international sugar demand and quotations fell in June. Sugar prices have fallen for two consecutive months, hitting a new low since February.
Looking at meat, international meat prices rose across the board in June, up 1.7% month-on-month and 12.7% year-on-year. Among them, the price of poultry meat has increased the most due to the impact of the Russia-Ukraine conflict and the northern hemisphere bird flu ; and after my country lifted its import restrictions on Brazilian beef, beef prices rose; from the perspective of pork prices, while my country's pork prices rose, Other consumer countries have also expanded their imports of international pork, and international pork prices have rebounded slightly; in terms of mutton, due to the decline in supply from New Zealand, international mutton prices have also rebounded.
Looking at from the perspective of dairy products, international dairy product prices rose across the board in June. As the heat wave swept across the world, the already sluggish milk production outlook continued to weaken. The market was worried about the supply situation in the second half of the year, which caused the demand for cheese imports to surge. Therefore, cheese rose the most. In addition, due to continued tight supply and unclear dairy market conditions in the coming months, milk powder and international butter prices have also increased to a certain extent.
Can the plummeting international grain prices still support the price of fertilizers?
International food prices have suffered a severe setback recently, which can be described as plummeting.The reason is that in addition to the improvement in harvest expectations in major grain-producing countries, it is also related to the Federal Reserve's interest rate hikes and central banks raising interest rates in response to rising inflation. This has led to increasing market concerns about future economic recession, which has severely hit the global Commodity trading , of course, also includes agricultural products.
We know that since last year, global fertilizer prices have continued to rise, which has also led to a significant increase in farmers' planting costs. Farmers in various countries have had to take negative measures to deal with it. In some countries, chemical fertilizers have even been reduced or even eliminated, which has intensified market sentiment. Concerns about reduced food production in the future.
At the same time, for farmers in countries with easy access to fertilizers, high food prices also have a negative impact on chemical fertilizers. Although fertilizer prices are high, high food prices encourage them to use more chemical fertilizers to obtain more output, supporting the continued price of chemical fertilizers. Runs strong.
With the recent slowdown in demand and the decline in commodity prices, the international fertilizer market continues to cool down, with the average international fertilizer retail price falling for the fifth consecutive week. Taking Brazil, a major fertilizer importer, as an example, the current CIF price of urea has dropped from a high of 1,000 US dollars/ton at the end of March to about 530 yuan/ton, almost halved; the CIF price of monoammonium phosphate has also dropped from 1,350 US dollars in early July. / ton dropped to 1,000 US dollars / ton; the price of potash fertilizer was also bearish.
We can see from this that although the global food supply is still showing a shortage trend, the previous high food prices were more due to market speculation. As commodity and food prices continue to decline, can it still support the current fertilizer supply? price? Still waiting for further verification by the market!
Although the current concerns about food inflation have been alleviated to a certain extent, according to the "State of Food Security and Nutrition in the World 2022" released by the FAO, due to the impact of the epidemic and rising global food prices, the number of people threatened by hunger worldwide has increased from 2020 to 2020. The number has increased by 46 million since then, and now it has reached 928 million people. In other words, one tenth of the world's population does not have stable food supply!
In addition, uncertainties such as conflict, drought, and food trade protection still exist, and they will still be the subject of speculation about food crises in the future. However, the current global economic environment is weak and international food prices may fall further in the future. Therefore, we need to treat information such as food shortages and rising food prices rationally.
