In the recent past, the global market for agricultural products has been tightening, and prices of important agricultural products, such as vegetable oils and livestock, have continued to rise, while some domestic agricultural products are still operating at a low level. Will international market prices be channelled to domestic markets and what will be the future trends in domestic agricultural prices? Media interviews were given to the team of chief trade analysts of the ministry of agriculture and rural agriculture's agricultural market alert team。
Q: what is the relationship between the continued weak functioning of our agricultural prices since last year and the fall in international agricultural prices
A: first, the gradual easing of international supply and demand for agricultural products is the underlying cause of the general decline in global agricultural prices. Despite the ongoing escalation of international prices of agricultural products as a result of the crisis and the new outbreak in ukraine, the food and agriculture organization of the united nations (fao) food price index reached a record 160. 2 points in march 2022, the world cereals entered a productive cycle with a phase of easing supply and demand. Fao data show that global cereal production reached an all-time high of 2,857 million tons in 2023/24, an increase of 43. 52 million tons, or 1. 5 per cent, over the previous year; and that inventory consumption was 30. 8 per cent, the highest in almost five years. At the same time, with the strong interest rate of the federal reserve, the tightening of global economic liquidity, the collective pressure on large global commodity prices, the entry of dollar-denominated international food prices into the lower lane, and the successive decline in the fao food price index, which fell to 117. 4 points in february 2024, almost three years in historical lows。
Moreover, large imports of important agricultural products, such as food, are a key factor in lowering domestic agricultural prices. In 2023, our food imports amounted to 1,619. 6 million tons, the second time our food imports had exceeded 160 million tons, an increase of 11. 7 per cent over the previous year. Of that amount, 5. 98 million tons of cereals were imported, an increase of 11. 1 per cent over the same period. In terms of species, in addition to rice and sorghum, imports of large food varieties, such as soybeans, wheat, maize and barley, increased by 11. 4 per cent, 21. 5 per cent, 31. 6 per cent and 96. 6 per cent, respectively. Imports of low-priced agricultural products have surged, and the impact of shocks has become evident, causing downward pressures on domestic market prices to increase。
Q: what has been the recent situation in international agricultural markets? What's gonna happen to us later
Response: the recent downturn in international agricultural markets is changing in trend, and the domestic passivity will shift from a “price drop-up shock” to a “price hike-down and pull-down”。
On the one hand, widespread international price increases for large agricultural products will lead to higher domestic agricultural prices. The data show that in november 2024, the fao food price index again strengthened, averaging 127. 5 points, with an increase of 0. 5 per cent in the ring ratio and 5. 7 per cent over the same period, which has risen for four consecutive months, reaching its highest level since the last 19 months. Vegetable oil prices increased the most, averaging 164. 1 points in the price index in november and 7. 5 per cent in the ring, the highest since july 2022, mainly as a result of increases in prices for palm oil, soybeans, sunflower and vegetable oil. Of these, international palm oil prices have risen for the sixth consecutive month, and, according to the southern peninsula palm oil squealers association (sppoma), palm oil production was reduced by 7. 3 per cent in october, while exports continued to increase significantly by 21. 1 per cent, with a projected future increase in vegetable oils. The price of dairy products continued to rise, with the price index averaging 139. 9 points in november, increasing the ring ratio by 0. 6 per cent, or 20. 1 per cent over the same period. The price of milk powder was affected by the rebound in global demand and the seasonal decline in milk production in western europe, which rose by 1. 6 per cent, with the highest increase in milk; butter prices rose for the fourteenth consecutive month, at an all-time high. The meat price index averaged 118. 1 points in november, with a slight decline in the ring but an increase of 5. 9 per cent over the same period. Of these, the beef price index continued to rise, averaging 126. 7 points in november, representing an increase of 0. 3 per cent in the ring, or 8. 6 per cent over the same period. In addition, the united states has already started an interest-rate cycle, which, based on historical experience, will further boost the global commodity boom。
On the other hand, a smooth contraction in agricultural imports will also support the strengthening of domestic agricultural prices. The surge in agricultural imports in 2023 was not the result of rapid growth in real consumer demand, but more of a short-term internal and external price differential. In the medium to long term, as a result of factors such as declining population size and ageing structures, the level of consumption of food rations in the country will gradually decrease, as will the level of consumption of meat, which will enter a steady period, and the pace of growth in overall demand for agricultural products, further advanced by the substitution of soybeans. As international prices of large agricultural products enter the upward trajectory and the external and domestic price differentials gradually shrink, our agricultural imports will show a downward trend, contributing to a steady recovery in domestic prices. In the first 11 months of the year, agricultural imports amounted to us$ 1969. 9 billion, a 7. 4 per cent decrease over the same period; rice, maize and meat imports decreased by 46. 8 per cent, 39. 9 per cent and 11. 2 per cent, respectively. In november, cereal imports amounted to 2. 054 million tons, a decrease of 66. 9 per cent, of which 67,000 tons of wheat, a decrease of 89. 9 per cent, 296,000 tons of maize, a decrease of 91. 8 per cent, and 7. 21 million tons of barley, a decrease of 40. 9 per cent; 241,000 tons of palm oil, a decrease of 57. 0 per cent; and 7,154,000 tons of soybeans, a decrease of 9. 6 per cent。
(by the agricultural trade promotion centre of the ministry of agriculture and rural development)
