Will global food prices usher in a new round of upward movement?

time:2022-12-09 20:07:39source:chakarski.com author:Aerospace stock
Will global food prices usher in a new round of upward movement?

Since the outbreak of the Russia-Ukraine conflict, the global food supply chain has been seriously affected, and international food prices have been rising. Subsequently, under the influence of better production expectations and a turnaround in Ukrainian grain exports, international grain prices fell. Now that the natural gas crisis in Europe continues to ferment, the shortage of chemical fertilizers in Europe may affect the planting and growth of autumn crops. At the same time, the conflict between Russia and Ukraine is still restricting food production and India's imposition of tariffs on rice exports has once again threatened food supplies. Zhongtai Securities believes that considering multiple factors such as high fertilizer prices, Russia-Ukraine conflict and India's export tariffs, it is expected that international food prices may continue to rise. First, fertilizer prices in Europe rose significantly. Due to high natural gas prices, many fertilizer plants in Europe announced shutdowns at the end of August. According to the European Fertilizer Association, fertilizer production capacity in Europe has been cut by more than 70%. The weakening of fertilizer production capacity has driven the sharp rise in fertilizer prices since September. The use of chemical fertilizers during the sowing period has an important impact on the annual grain yield. Fertilizer prices are high, which will put further upward pressure on grain prices in the near-term harvest. Chen Xing, an analyst at Zhongtai Securities, pointed out that wheat and corn were more affected. Among the world's food exports, wheat and corn are the most important export crops, both accounting for about one-third of global exports. The global Agricultural Market Information Group (AMIS) slashed production forecasts in June due to the impact of extreme weather. Second, the conflict between Russia and Ukraine continues to restrict food production. After the outbreak of the Russian-Ukrainian conflict, Ukraine's grain exports fell by more than 50% compared with last year. Russian wheat exports were also severely damaged, falling by about a quarter in the first two months of the new agricultural year (2022.7-2023.6). Although the reopening of the Black Sea port has eased the pressure on food, the conflict between Russia and Ukraine may be difficult to reconcile in the short term, and food prices are still under pressure. In addition, Zhongtai Securities pointed out that the recent Indian tariffs may push the price of rice up by more than 10%. Recently, India imposed a 20% tariff on its exports of white and brown rice, which applies to 60% of India's rice exports. The chairman of the Rice Exporters Association of India predicts that the imposition of tariffs may increase the export price of rice from the current US$350/ton to more than US$400/ton, an increase of 14.2%. This article is mainly excerpted from Zhongtai Macro's "Overseas | Will global food prices usher in a new round of upward movement?" [Zhongtai Macro·Chen Xing Team]" This article comes from Wall Street's news, welcome to download the APP to see more
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