In 2023, the world's three major cereals are still full of uncertainty? Is it risk or hype?

Looking back on the grain market in 2022, the three major grains in the world experienced a roller coaster-like shock trend. First, the price of wheat rose sharply, pulling corn and soybeans to high levels.

Data show that in March, the price of wheat once rose to an all-time high of 12.94 USD/bushel, exceeding the highest price in 2008. In April, the price of corn also climbed to 8. 14 USD/bushel, the highest level since 20 12. In June, the soybean price rose to 17.69 USD/bushel, which also hit a record high.

However, with the Fed actively raising interest rates, the impact of the market on the conflict between Russia and Ukraine gradually digested, and the expectation that global inflation peaked and the economy began to decline, food prices also began to fall.

This can also be seen from the changes in the global food price index released by FAO.

In the first half of the year, the index was generally at a high level, hitting a new high in nearly 30 years in March.

Then it began to fall back slightly until the second half of the year began to plummet. By the end of last year, the global food price index almost fell back to the level of 202 1, with a year-on-year increase of only 0.3%.

But by 2023, it is generally believed that the trend of global commodities will change from shock to adjustment, from high level to balance between supply and demand, from ups and downs to narrow fluctuations.

But, as we said before, food is an exception.

Because food is not only a commodity, but also the basis of survival, especially in the turbulent pattern, food has become a strategic weapon.

Since the outbreak of global epidemic and the conflict between Russia and Ukraine, food has been pushed to the forefront. Coupled with extreme weather, the grain output fluctuates, and the demand for grain in various countries increases greatly, resulting in an increase in the overall demand for grain.

Therefore, some people believe that the risks in the global grain market still exist, or that the supply side is still affected by various factors under the overall demand growth. From the perspective of grain output in various countries, the prospects of the three major global grains are not clear.

The main factors affecting the grain supply in 2022 will still exist in 2023, making the instability of grain supply prominent.

The first factor is the food supply and export caused by the conflict between Russia and Ukraine.

Although the impact of the Russian-Ukrainian conflict seems to have been gradually digested by the market, when the conflict will end has become the biggest uncertainty, and a series of related sanctions imposed on Russia by the United States and the West have also become uncertain factors in the grain market.

In addition, Russia and Ukraine are both big grain exporters, and their grain exports account for an important proportion in the global market. In particular, last year, the outbound transportation of the Black Sea port was stagnant for many times, which caused great concern in the market and once pushed up food prices.

Although the Black Sea port has been restored, it is still fragile as a whole. The data shows that Ukraine's grain exports are still lower than the previous level.

The second factor is that extreme weather is still frequent.

In 2022, the severe drought in Europe and other places had a great impact on food, and food production was directly threatened.

At present, the cold wave and stormy weather in the great plains of the United States have damaged the output of winter wheat in the United States, and the price of wheat in the United States has risen, which has driven the rise of corn.

In the case that both American corn and Ukrainian corn are expected to reduce production, buyers in the global market began to turn their attention to South American crops.

The strong export of Brazilian corn began to be collected by the market at the end of last year, and this year, Brazilian corn will usher in a critical growth period in1-February, or will once again become the object of speculation in the corn market.

Argentina is also experiencing dry and rainy weather, and the market is beginning to worry that its corn and soybean production may decline.

In terms of soybeans, it is relatively looser than corn and wheat, mainly due to the expected increase in soybean production in South America, especially Brazil, which has brought a lot of stability to the global soybean market.

However, with the high yield of South American soybeans, it will compete with American soybeans and bring opportunities for capital speculation.

The third factor is that the cost of chemical fertilizer is still at a high level.

Although the international fertilizer price has dropped from a high point with the continuous downward trend of global energy prices, it is still higher than the average level in the past five years.

This means that the global food production cost is still at a high level, which will also become an important factor affecting food prices.

From this point of view, there is indeed uncertainty in the global food supply, but after the sharp fluctuations in the previous two years, the market is returning to adjustment, and the subsequent changes bring together three points: First, how to turn after the conflict between Russia and Ukraine; Second, whether there is extreme weather; Third, we should guard against capital speculation and avoid into the pit.