Extreme weather grain export

The turmoil in the grain market can be described as wave after wave.

Not long ago, the Russian side said that most of Ukraine's grain shipped from the Black Sea port was not shipped to developing countries, but to the European Union, so Russia will consider revisiting the agreement on exporting grain from the Black Sea port.

This statement once again frightened the market, and then the international wheat price rose by 7%.

However, this news has not been digested by the market. On September 8, India announced that it would impose a 20% export tax on rice except steamed rice and Indian fragrant rice from September 9, involving ungelatinized rice, husked brown rice, semi-milled rice and whole milled rice, and prohibit the export of broken rice.

Once again, a stone stirs up a thousand waves.

Since this year, India's grain export policy has also changed several times.

When the conflict between Russia and Ukraine just broke out, the price of wheat soared instantly.

As the second largest wheat exporter in the world, India shouted the slogan of "feeding the world" at that time, and then the export volume of Indian wheat also increased greatly.

However, due to the high temperature and heat wave, India's wheat production has fallen sharply, and its domestic wheat price has been rising.

So in May, India announced a ban on wheat exports.

But to be honest, India's ban on wheat exports has little impact, because although India is the second largest wheat producer in the world, it is not a big wheat exporter.

The data show that in 20021year, India's wheat exports only accounted for 3% of the global wheat exports.

But rice is different.

India is the largest rice exporter in the world, and its rice exports account for more than 40% of the total global rice exports.

Last year, India's rice exports reached a record 265,438+500,000 tons, exceeding the total rice exports of Thailand, Vietnam, Pakistan and the United States.

Therefore, India imposed relevant restrictions on rice this time, which triggered a big collection in the market.

However, the restrictions on rice this time are not sudden, because at the end of August, there were media reports that India was discussing restricting the export of broken rice.

This time it's just "boots landing".

There are two main reasons why India "hands-on" rice:

First, the high temperature and heat wave weather caused rice production reduction expectations.

According to reports, affected by high temperature and heat wave, four Indian states suffered severe drought, with an area of 2.5 million hectares, which may lead to a reduction of grain production by about 7 million to 8 million tons.

However, the rainfall in the main rice producing areas such as West Bengal, Bihar and Uttar Pradesh is below average, which reduces the rice planting area in these areas by about 5.6%. Coupled with the productivity decline caused by the high temperature effect, the market predicts that the rice production in India will be reduced by at least 8% this year.

On the other hand, the price of rice in India continues to rise.

After the outbreak of the conflict between Russia and Ukraine, the prices of wheat and corn soared, but the price of rice fluctuated within a limited range.

This is mainly because the main producing areas of rice are mainly located in Asia, and the stocks are relatively sufficient, so it is not greatly affected by the Russian-Ukrainian conflict.

However, with the increasing expectation that extreme weather will lead to the reduction of rice production in India, the market is worried that India may restrict the export of rice like wheat, resulting in very strong market demand, which in turn makes the price of rice in India keep rising and reach the highest point in more than a year last week.

As of last week, the price of 5% broken rice in India was 379 ~ 387 USD/ton, the highest since June last year.

The price difference between 100% broken rice and 5% broken rice is also narrowing, and the domestic inflation in India is constantly high. The Indian government has begun to take measures against rice.

So what will be the impact of India's restrictions on rice?

1, or push up the global rice price

According to a report released by the US Department of Agriculture in August, the global rice supply is expected to decrease by 465.438 million tons to 697.3 million tons in 2022-2023, mainly due to the reduction of rice production in Bangladesh and India.

As the world's largest rice exporter, although steamed rice and fragrant rice are excluded from export tariffs, white rice and brown rice will be subject to tariffs, which account for more than 60% of India's exports.

Therefore, India's rice exports will drop sharply in the future, which may push up the global rice price.

2. Aggravate global food inflation

More than 150 countries in the world buy Indian rice, and about 3 billion people in the world live on rice. Therefore, the reduction of Indian rice exports may further aggravate global food inflation.

Especially in some poor countries, because 100% of broken rice is also used for food (although 100% of broken rice is usually used as feed grain).

The latest report released by FAO shows that the global food price index continued to decline in August, falling for the fifth consecutive month, but it was still 7.9% higher than the same period last year.

Among them, the grain price index is the main driving factor for this year's grain price increase, and the grain price index is still up 1 1.4% compared with the same period last year.

What worries the market more is whether India's restrictions on rice will trigger a global food crisis.

Because in 2007~2008, India and Vietnam successively banned rice exports, which led to a sharp rise in global rice prices, which in turn triggered a global food crisis.

Therefore, the turmoil in the global food field is far from over, and the threat of food crisis has not been lifted, but it has begun to turn to a new turbulent stage.