The causes of the price rise of agricultural products and its subsequent influence

Introduction: during the Spring Festival, the price of international agricultural products began to rise quietly as soon as it changed from the downturn before the festival After the Spring Festival, when Chinese investors returned to the market, they passively recognized the rise After the long weekend of the U.S holiday (February 21), agricultural prices have surged again across the board What will be the cause, sustainability and impact of the price of agricultural products this time? The devaluation of the U.S dollar pushed up the price In 2004, the U.S recorded a trade deficit of $617.73 billion and the Japanese economy showed signs of recession again After the data of the unexpected expansion of the current account surplus of the U.S in December last year was released, the U.S dollar began to fall again Federal Reserve Chairman Alan Greenspan said in congressional testimony in February that the U.S economy is performing well and that interest rates in the U.S dollar will still increase gradually But then there was a drop in consumer confidence in the US, and the rise in PPI (producer price index) sent the US economy into a gloomy state All of this has made dollar assets less attractive The dollar fell further In December last year, the international market's buying volume of US dollar assets fell again, and the South Korean Central Bank said it planned to increase the reserves of non US dollar reserve assets such as those denominated in Australian dollar and Canadian dollar, breaking Greenspan's prediction that "Asian investors will support us dollar and the US current account deficit will shrink" at G7 meeting on February 4, which pushed the US dollar through six weeks Low point The decline of the US dollar has led to an overall rise in international commodity prices denominated in US dollars According to the report of Morgan Stanley in January 2005, it predicts that the euro will rise to 1.5 against the US dollar, which means there is still about 15% room for depreciation from the US dollar During and after the Spring Festival, the international energy agency lowered the growth expectation of crude oil supply of non OPEC member countries in 2005, believing that the world crude oil supply will remain tight in 2005 The Iran bombing and the United States are facing severe cold wave attack again, making the crude oil price hit the high of 55.67 USD / barrel in October 2004 again Crude oil is the basic industrial raw material The rise of oil price will increase the cost of chemical raw materials and transportation costs, which will bring inflation concerns and increase the cost of import and export of agricultural products, which also to some extent promotes the price of agricultural products Due to the ideal global natural climate conditions in 2004, the output of international agricultural products increased significantly For example, the global output of soybeans and cotton increased by more than 20% in 2004 The huge supply pressure and China's macro-control made the prices of major agricultural products in the world drop sharply In this context, international funds have accumulated a large number of net positions in commodity futures In the fourth quarter of last year, after the dust on production expectations settled, the fund's net short position closed to a peak At this time, the depreciation of the US dollar and the rise of crude oil price prompted the fund to close its position However, China's GDP grew by 9.3% in the whole year, and China's PPI and CPI continued to fall in the fourth quarter, which seems to show that China's economy still maintained a strong upward momentum under the condition of "soft landing" The expectation of the recovery of China's demand after the festival prompted the international fund to choose to hold agricultural products with relatively low metal and crude oil prices against the background of large overall agricultural product supply It seems that the international fund has returned to the old way of making long commodities and forcing positions in China The price rise of agricultural products will continue to be seen from a global perspective As the demand growth of agricultural products is generally relatively stable, the demand will fluctuate to a large extent only when the economic growth of a large population country such as China and India changes greatly Therefore, there are only two factors that affect the price of agricultural products: the supply change of agricultural products and the currency change of major trading countries From the perspective of currency, despite Greenspan's optimism on the economic growth of the United States in his recent speeches on various occasions, inflation in the United States is still low and employment has increased in the near future But US industrial production, manufacturing index and leading indicators are still declining, and current account deficit is still increasing After six successive interest rate hikes, the international world is still uneasy about the US debt problem From the perspective of the supply change of agricultural products, the high-yield of agricultural products in 2004 makes the overall supply pressure of agricultural products greater, but from the perspective of the future, agricultural production in 2005 will again face the harm of "El Nino" phenomenon The early symptom of "El Nino" phenomenon is the warm winter in the northern hemisphere, which has been reflected in the past few months The correction of crude oil price in the fourth quarter of last year is the reflection of the warm winter in the United States From this year's weather conditions, under the condition of the expansion of wheat planting area, the "late spring cold" that may appear in the near future will probably cause harm to the wheat seedlings returning to green However, the drought in South America has had a great impact on the output of soybean and cotton At present, the market's expectation on the output of South American soybean is 7-8% lower than the previous period The impact of rising agricultural products on China's economy in 2004, China's CPI exceeded the market's 5% warning line for four months from June, which ultimately led to the decision of the people's Bank of China to raise interest rates on October 28 Among them, the huge increase of agricultural product prices from the fourth quarter of 2003 to the first quarter of 2004 contributed more than 30% to the increase of CPI According to the data released by the National Bureau of statistics in January this year, PPI growth in January was 5.8% higher than that in the same period of 2004, and the growth rate fell for the third consecutive month, while the CPI growth rate continued to decline for five months, which shows that China's current inflation pressure has been greatly reduced But the rise in commodity prices in February, especially in agricultural products, has changed perceptions From the perspective of PPI, as the price of agricultural products is still rising sharply in the first quarter of last year, if the price of agricultural products does not rise very much in March, the PPI in the first quarter may continue to fall, but the price of agricultural products fell sharply in the second quarter of last year If the price of agricultural products continues to rise in the second quarter, it will have a greater impact on the rise of PPI In other aspects, the prices of steel, electricity, coal and crude oil have also risen in the near future, and the energy demand in the second quarter may fall seasonally, but the specific range is hard to say In addition, last year, China made good achievements in the policy of agriculture, rural areas and farmers The policy of "giving more and taking less" to agriculture and the rise of the price of agricultural products made the income of farmers increase significantly, which attracted many migrant workers to return home to work in agriculture, thus a large area of "migrant workers shortage" appeared in the vast coastal economic developed areas The labor cost of the factory is likely to continue to increase In addition, this year, the state will continue to strengthen the supervision of environmental protection and production safety in industrial production Chinese enterprises owe a lot in this regard in order to increase production and reduce costs Investment in this area will also increase production costs On the whole, the rise of basic production factors, labor factors, public utilities and service prices will cause "cost driven" inflation, which may be reflected after the second quarter