Next year is another good year wheat price analysis

Introduction: since the break on September 27, 2004, the price of wheat futures fell to 1700 yuan / ton at the beginning of November, then rebounded to around 1760 yuan / ton, continued to break in the beginning of December, began to fall into consolidation on December 8, and fell again on December 23 Continuous decline - rebound (small range or consolidation instead) - falling again fully shows that the wheat futures price runs in a complete downward trend, and any rebound is a selling opportunity According to the trend of wheat price in recent ten years, wheat price can be divided into low price area, middle price area and high price area Below 1200 yuan / ton is the low price area, 1200-1500 yuan / ton is the medium price area, and above 1500 yuan / ton is the high price area Although the current wheat spot price has gone through the early decline, it still runs in the high price area, and the current market environment does not support the wheat price to maintain the high price operation, which we will discuss in detail below 1 National macroeconomic policies limit the space for grain prices to rise First of all, the country's active fiscal policy has faded out, and the central economic working conference at the beginning of the month clearly proposed to implement stable fiscal policy and monetary policy, which is quite different from the previous active fiscal policy; second, from the perspective of financial policy, from October 2004, the first interest rate increase of the central bank indicates that it has entered the interest rate increase cycle, and the continuous interest rate increase will reduce the society The total amount of money supply makes more money flow into banks Thirdly, the voice of RMB appreciation is growing day by day In the context of the continuous depreciation of the US dollar, major economic powers have increased the pressure to force RMB appreciation Although the government did not explicitly say that RMB would appreciate, the hearsay about appreciation has repeatedly stirred waves in the future market, and each hearsay has led to a sharp drop in the market The author thinks that under the premise of undertaking the obligation of being equal to that of a big economic country like China, the possibility of RMB's final appreciation is very great, and the appreciation is a double-edged sword, which is not necessarily a bad thing In its latest report, JPMorgan predicts that the Chinese government will gradually relax the fluctuation of RMB in the next three to six months, and the RMB will appreciate 7% against the US dollar by the end of 2005 These macro factors indicate that China's economy will slow down in 2005, the price rise of raw materials driven by the rapid economic growth since 2003 will come to an end, the commodity price level will gradually fall from the current high, and the hidden danger of inflation will gradually disappear, under this background, the space for grain price rise will be obviously suppressed What's more, the central government clearly proposed to "maintain the basic stability of grain prices at a reasonable level" The national development and Reform Commission also said that "next year, we should not only prevent the fall of grain prices, but also prevent the sharp rise of grain prices, so as to maintain the basic stability of grain prices at a reasonable level" It can be seen that maintaining the stability of grain prices and preventing the sharp rise and fall of grain prices are the key points of regulation and control If we combine the rise of grain prices with the importance of the country In terms of agricultural policy, increasing grain output and preventing the price of grain from rising are the most important The significance of grain price to macro economy can be explained by CPI CPI in October increased by 4.3% year on year, not only lower than 0.9% in September, but also reversed the increase of CPI higher than 5% for four consecutive months Some authoritative figures have calculated that in August, 31.8% of the CPI rising index, the increase of grain price, which has pulled 13.9% of the food price rise, and then 4.7% of the CPI rise, has contributed 88% of the CPI rise From March to April 2004, Henan Province sold a large number of wheat reserves to show the determination of the state to resolutely control the rise of grain prices Since then, wheat prices have repeatedly but never returned to the high of March 2004 From the perspective of the state's heavy agricultural policy, 24 provinces in China have been exempted from agricultural tax, especially Henan Province, which accounts for 1 / 4 of the country's total output of wheat in major agricultural provinces, has also announced that it will be exempted from agricultural tax since 2005, which is of great significance The overall performance of the heavy agricultural policy is that "next year, the strength of various agricultural supporting measures should be increased", "the strength of supporting agriculture should be gradually increased", "now it has generally reached a new stage of promoting agriculture by industry, and the development of cities and villages" It can be said that the era of industry supporting agriculture has come The specific performance is as follows: first, direct subsidies are given to farmers for grain production, and at the same time, there are subsidies for improved varieties and agricultural machinery; second, exemption from agricultural tax, agricultural specialty tax and reduction of agricultural tax rate, the implementation of these unprecedented heavy agricultural policies in Chinese history will have an unprecedented impact on agricultural development, and farmers' enthusiasm for grain production will be greatly improved This is not only seen from the output - in 2004, the total domestic grain output will reach more than 460 million tons, an increase of 25-30 million tons over the previous year, but also reflected in the phenomenon of "shortage of migrant workers" in the south The result of this is the benign coexistence of low grain price and stable output, which has been verified abroad The United States has implemented industrial back feeding for a long time Agricultural policy, in recent decades, the relatively low price of agricultural products is a typical example II The change of wheat fundamentals determines the main trend of price decline year 1998, 1999, 2000, 2002, 2003, output (10000 tons), 11000, 11400, 100009400, 9000, 8600, milling consumption (10000 tons), 95009400, 9300, 92000, 9000, feed consumption (10000 tons), 120200, 400 In terms of yield, the yield of wheat in 2003 has reached the bottom of nearly ten years, and the price has also increased from 1000 / ton to nearly 1900 yuan / ton at the end of 2003, which reflects the change of yield rapidly However, in 2004, the output in the market was expected to be reduced on the basis of 92 million tons, an increase of 5% compared with 2003, reversing the history of five consecutive years of decline in wheat output, which is of great significance However, the winter wheat produced in 2005 has entered the overwintering period Although the high temperature from November to the beginning of December caused the wheat to grow vigorously, the heavy snow in North China around December 20 is very helpful to restrain the wheat to grow vigorously and help the wheat to survive smoothly There is a saying in the folk proverb that "a good snow is a good year" and "this year, the wheat cover will be three layers, and next year, you will sleep on a bun" It can be seen that every snowfall will provide an insurance for the increase of wheat production In history, North China has thousands of years of wheat planting history The climate here is very suitable for wheat planting One year's winter wheat production in Henan Province alone accounts for one fourth of the national wheat production Therefore, it only needs Hebei, Shandong and Henan in North China to observe the wheat production The winter wheat in these three provinces accounts for 50-70% of the national winter wheat production According to the wheat industry planning of the Ministry of agriculture, it is necessary to Wheat production in the three provinces will be further concentrated Although the growth period of wheat reaches 8 months, the climate change in these 8 months has little impact on the total yield of wheat, which is very different from the close relationship between autumn grain and weather In this case, the most important factor determining the yield of wheat is the sowing area, which is the same with the short-term and long-term statistical results According to statistics, in 2004, the sown area of winter wheat reached 266 million mu, an increase of 15 million mu over the previous year, of which the area of Henan Province increased by more than 2 million mu, and other major producing provinces and non major producing areas increased significantly Due to the high price of wheat during sowing, the input of farmers is increased One is the large amount of fertilizer, the other is the large amount of sowing, so the number of tillers of wheat is very large If there is no large area of lodging of wheat in next year, the winter wheat output in 2005 will keep the high level in 2004, reaching 90 million tons or more In terms of consumption, the annual consumption of wheat in China in the past few years has been relatively stable, about 105 million tons, but the author estimates that the consumption will be lower than this figure in 2004-2005, mainly due to the change of wheat consumption structure The consumption of wheat is mainly the consumption of flour, but it can be seen from the above table that the consumption of flour and its proportion in the total consumption are decreasing year by year, while the consumption of feed is increasing year by year, offsetting the decline of consumption of flour But in 2004, the proportion of feed wheat consumption will be greatly reduced, which is mainly caused by the big price gap with corn Before the overall increase of grain price in October 2003, wheat and corn were basically the same price, but in the process of the simultaneous increase of grain price, rice was the strongest, wheat was the second, and corn was the weakest; in the later period, when the grain price fell, rice and wheat dropped slightly, but corn was very large Compared with the highest in March, the price of wheat fell by 10%, while the price of corn fell by 15% At present, the price difference between corn and wheat in North China is about 0.2 yuan / Jin The consumption of feed wheat will probably be only 2-3 million tons or less in 2004, and this trend will be maintained in 2005 In the case that the consumption of flour is difficult to increase substantially, the decrease of feed consumption will reduce the total consumption of wheat From the perspective of import volume, China has become a net exporter of wheat since 2002 In 2003, the export volume also reached 2.24 million tons, while the import volume was only 420000 tons However, in 2004, a large amount of net export of wheat was achieved In 2005, the import volume of this trend also increased sharply, reaching 7.26 million tons in the whole year, reversing the previous two trends, and at the same time, it will increase other import sources, such as 700000 tons of wheat to be imported from France and 300000 tons of wheat to be purchased from the Czech Republic, according to the world grain network on December 23 From the inventory point of view, because the official wheat inventory in China is always in a confidential state, all data can only be inferred and confirmed from other aspects In the year with the highest wheat stock, the stock is estimated to reach 100 million tons per day In 1997, the wheat output reached the highest 123 million tons, while in 1995-1999, the imports were 11.58 million tons, 8.25 million tons, 1.49 million tons and 450000 tons, respectively The huge stock is the common result of the increase of output and import Although the continuous use of wheat stock reached 60.71 million tons in 2000-2003, the continuous use of wheat in 2004 In 2004 / 05, the author estimated that there should be at least 40 million tons of wheat inventory at the end of the inventory The inventory consumption ratio is more than 30% From this point of view, there is no shortage of production The price rise is not only caused by the continuous decrease of output, but also by the driving of autumn grain and the bottleneck of transportation There is a lot of debate about how much inventory to have One of the main reasons for maintaining high inventories is the fear of food In fact, there is no lack of food in this world What is lacking is a free trading system and currency High grain inventory not only depresses the price of grain, but also requires huge storage costs, as well as the problem of aging grain, which is a waste of resources But judging from the purchasing situation of our country from all over the world, the government's panic about inventory has not disappeared, obviously the inventory continues to maintain a high level As for the international market, the report of the United States Department of agriculture on December 10 predicts that the global wheat output in 2004 / 05 will be 682.6 million tons, an increase of 1.3 million tons compared with the statistics of last month, and an increase of 66.87 million tons compared with the end of last year, which is a record high in the world The inventory is expected to be 142.83 million tons at the end of 2004 / 05, an increase of 11.84 million tons over the previous year Now the wheat in the southern hemisphere is being harvested, and the future report may continue to increase production The world wheat stock reached a low in 2003, and the continuous decline in the stock has ended since 2004