Financial Associated Press, May 28 (Editor Tang Yetian) The storm of the Russian-Ukrainian conflict in the first quarter of 2022 continues to have an impact on the world. Following the ban on wheat exports in mid-May, on May 27, it was reported that India may consider restricting rice exports. Then, it was reported that Thailand was expected to join forces with Vietnam to raise rice prices in order to increase their bargaining power in the world market.
As of last year's data, India, Vietnam and Thailand are the world's leading exporters of rice, accounting for about two-thirds of the world's rice exports combined.
According to the British "Economist" article, expensive staple food has increased the number of people suffering from food insecurity by 440 million to 1.6 billion. Nearly 250 million people are on the brink of famine.
The main funds rush to raise agricultural stocks
In the afternoon of May 27, the A-share seed industry leader and the frequent customer on the recent Dragon and Tiger list suddenly pulled up, and then sealed the rise and stop, along with Jinjian Rice, Tsuen Yin Hi-Tech and other seed industry stocks.
On that day, the agricultural development seed industry and smart agriculture ranked sixth and seventh in the net inflow of main funds respectively. After hours on May 27, reports of India's rice export restrictions proved to be a false alarm by new news, as the local rice supply surged and India had no plans to restrict rice exports for the time being.
Even so, the cloud of doubt associated with international rice trade has temporarily dissipated, but even so, the flow of funds still shows that food security issues have been the focus of attention in international and domestic markets in recent times.
In the fourth week of May, the individual stocks with the most main funds grabbed were digital agriculture concept stocks smart agriculture. The institutional view is that since 2019, global food prices have continued to be high, ostensibly due to factors such as the epidemic, geopolitical conflicts, slow global spring sowing, high fertilizer costs, and a new round of trade restrictions; but at a deeper level, it is the background of the epidemic and trade conflicts that the global value chain and supply chain have been seriously impacted by non-economic factors, and the uncertainty of global food supply has increased, exacerbating price increases.
When India imposed a wheat export ban half a month ago, the International Food Policy Research Institute (IFPRI) released data showing that the Conflict between Russia and Ukraine has led to a shift to food protectionism in 23 countries, with restricted agricultural products accounting for 17% of global food trade.
The trend of food protectionism in many countries is obvious, and there is no shortage of A-share agriculture and seed industry concept stocks that have recently been grabbed. In fact, in recent years, domestic grain supply and demand have been relatively stable, and in addition to soybeans, the dependence on overseas imported grain is low. According to international standards, a country's grain reserves should account for 18% of the total grain consumption of that year, while the mainland's staple grain reserves are roughly equivalent to the international double standard. The absolute level of domestic stocks of major grains is near a historical high, and the supply is supported. However, considering the export of fertilizers in Russia and other issues, the rise in the prices of raw materials such as crude oil and fertilizers may still raise the cost of comprehensive crop cultivation.
Institutions: The development pattern of the seed industry in the mainland may undergo fundamental changes
In 2021, the combined net imports of rice, wheat, corn and soybeans from the mainland accounted for 23.6% of the year's output, founder securities said, although this figure is not low, but this is mainly because the mainland is more dependent on soybean imports. According to estimates, after the elimination of soybeans, China's net grain imports account for about 5% of the current output, and China's dependence on overseas imports of rice, wheat and corn is low. In contrast, the upward price of soybeans and oils and fats has a more direct impact on the mainland. In addition, it is necessary to be vigilant against the potential impact of pig cycle and feed problems, and inflation may be transmitted to a wider range of food sectors such as grain and oil, pork, eggs and milk.
At present, the cost of soybean production in the United States is much lower than that of China, making the current dependence of soybeans on the mainland too high (more than 80%), and the 14th Five-Year Plan requires soybean production to increase from 19.6 million tons in 2020 to 23 million tons in 2025 (cumulative increase of 17.34%), oilseed production from 35.86 million tons to 40 million tons (cumulative increase of 11.5%), and rapeseed production from 14.05 million tons to 18 million tons (cumulative increase of 28%). Shen Wanhongyuan said that the high demand for growth also reflects the importance and urgency of food security.
Standing at the current point in time, Kaiyuan Securities said in the medium-term strategy of agriculture, forestry, animal husbandry and fishery that the prices of major global agricultural products will remain high in 2022, grain prices are easy to rise and fall, and the prosperity will be transmitted upstream. Combined with the background of the revitalization of the domestic seed industry, the development pattern of the seed industry in the mainland may undergo fundamental changes. As the world's largest single market, China's demand scenarios and demand scale are large and perfect, providing a good soil for supply-side reform. Enterprises with excellent breeding innovation capabilities will stand out in the next stage and are expected to enjoy policy dividends for a period of time.
Specific to individual stocks, the certainty of profitability transmission is also a dimension that investors are more concerned about in the near future, and the financial association combs the planting and seed industry stocks with better sales gross margin, net profit and year-on-year growth rate in the first quarter as follows:
This article originated from the Financial Associated Press