International food prices continue to “shoot up”, what are the reasons behind it, future interpretation and domestic impact? This article is for reference.

The global food crisis intensifies, the specific manifestation? Prices continue to rise, food trade protectionism is on the rise

After a sharp rise in 2020, international food prices have continued to soar since March, especially for corn and soybeans. International food prices have risen sharply. The food price index released by the Food and Agriculture Organization of the United Nations (FAO) has risen from less than 100 in 2019 to around 130 in 2021. Since March this year, food prices have once again “charged” and once approached 160. Among them, international agricultural futures such as corn and soybeans rose by more than 80% compared with the end of 2019.

Under the sharp rise in food prices, food trade protectionism has risen, and economies such as India have begun to restrict the export of food crops. With the tight supply of global agricultural products and the sharp rise in food prices, more and more economies have begun to impose export restrictions on agricultural products such as grains and edible oils out of the consideration of ensuring domestic food supply and stabilizing domestic food prices. For example, in mid-May, India announced a ban on wheat exports and plans to start restricting sugar exports in early June. Under the imbalance between supply and demand, the global food supply such as wheat is at a historically low level, further pushing up food prices.

The global food crisis is “the driving force”? Extreme weather has long been foreshadowing, and the conflict between Russia and Ukraine “adds fuel to the fire”

The global food crisis has had “signatures” for a long time. Repeated epidemics and extreme weather in some areas have increased the gap between food supply and demand. The rise in food prices has long been foreshadowed. After the La Niña hit in the second half of 2020, the United States, Brazil and other countries have suffered severe droughts, and the production of major food crops has decreased. Among them, Brazil’s corn production in 2020/2021 has shrunk by more than 9%. In addition to extreme weather, repeated epidemics have also damaged some grain production, such as Brazilian soybeans. In addition, increasing demand for biofuels and rising costs of crops such as fertilizers have also indirectly pushed up food prices.

Under the tight balance between supply and demand, the conflict between Russia and Ukraine has further “fueled the fire”, and the reduction of crop production and the blockage of the supply chain have increased the pressure on food prices. Ukraine and Russia are important producers and net exporters of agricultural products. The exports of rapeseed oil between the two countries account for nearly 80%, and the total share of barley and wheat also exceeds 25%. The complication of the situation in Russia and Ukraine may lead to a significant decline in crop planting throughout Ukraine. At the same time, the Black Sea shipping route that Ukraine relies on for grain exports has also been significantly blocked. For example, the number of ships in the Black Sea-Ukrainian waters has dropped sharply to half of the previous period, and the speed has also slowed down significantly.

Under the global food crisis, China’s food price worries? The prices of agricultural products with high import dependence may be easy to rise and hard to fall

Under the gap between supply and demand, some international grain prices may remain high, and the prices of agricultural products such as soybeans, which are highly dependent on my country’s imports, may easily rise but not fall. Most of the demand for food crops comes from food processing, etc., and the fluctuation is small; however, the supply side has been continuously disturbed by extreme weather and repeated epidemics since 2020. This year, the conflict between Russia and Ukraine has further exacerbated the tight supply balance. Some of my country’s import-dependent agricultural products, soybeans, etc. may be easy to rise and hard to fall.

Domestically, the epidemic has interfered with the rise in production costs of crops such as farming and fertilizers in stages, or increased the pressure on the prices of agricultural products. Since March, the domestic epidemic has repeated, and some major grain-producing provinces such as Jilin have also been hit by stages, or spring ploughing has been affected to a certain extent. At the same time, the cost of chemical fertilizers and other costs has risen, which may further push up the price of food. For example, the comprehensive price index of chemical fertilizers hit a record high of 3615, an increase of more than 20 percentage points since the beginning of the year.

Risk warning: raw material supply is less than expected

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