On October 23, Anhui Province launched the 2021 mid-to-late rice storage plan, which will boost the continued weakness of the rice market and also indicate that the bottom of the market stage is basically formed. So how will the rice market trend develop next, and how should growers, drying plants and rice companies choose?
First, the situation on the supply side of rice
1. The supply of rice market in 2020 will increase significantly year-on-year
In the second half of 2020, due to the continuous rise of the rice market, corporate procurement was actively rising, and the transaction volume of policy-oriented rice reached 17.23 million tons, an increase of more than 4.6 million tons year-on-year, hitting a record high. In 2020, the total rice production increased by more than 2.2 million tons year-on-year, while the purchase volume of the city was only 6.1 million tons, a sharp decrease of more than 16.7 million tons year-on-year. The increase in policy-oriented rice transactions, the increase in rice production and the decrease in the purchase of the city increased year-on-year, and the supply of rice markets brought by the three items increased by more than 23 million tons year-on-year.
2. The increase in imported rice in 2021 is obvious
According to data from the General Administration of Customs, China imported 380,000 tons of rice in September, an increase of 138.5% year-on-year; from January to September, the cumulative import of 3.56 million tons, an increase of 113.6% year-on-year. The total import volume for the whole year of 2020 was 2.91 million tons.
From the pre-duty price point of view, the cost of rice imports this year is significantly lower than the same period last year, 1-9 months fell by 20% year-on-year, to 2949 yuan / ton, each monthly level except for a slight increase in July, the rest of the months have fallen significantly.
Source: Customs Data, China Grain Network
3. The supply of early rice in the early rice market in 2021 will increase slightly year-on-year
According to the National Bureau of Statistics, in 2021, the sown area of early indica rice in the country was 4734 thousand hectares, down 0.4% from the previous year; the total output was 28.02 million tons, an increase of 723,000 tons over the previous year, an increase of 2.7%.
This year's early indica rice production increased by 723,000 tons from the previous year, and the lack of start-up of the purchase of the city (the purchase volume of the previous year was about 400,000 tons), which is equivalent to an increase of 400,000 tons of supply compared with the previous year, so the supply of early indica rice increased by 1.1 million tons year-on-year.
Second, policy orientation
At present, China's grain procurement has formed a new pattern dominated by market-oriented acquisition and supplemented by policy-oriented acquisition, the formation of grain prices has gradually returned to marketization, and the grain collection and storage mechanism of high quality and good price has gradually taken shape.
A relevant person in charge of the State Grain and Material Reserve Bureau said that during the autumn grain purchase period this year, most areas are unlikely to launch a minimum purchase price plan for medium and late rice. Of course, it is not excluded that individual major producing cities and counties may start the acquisition of the city on a small scale due to the influence of factors such as large volume and long distance.
From the current point of view, the purchase of grain in the trust city is still an important institutional arrangement for protecting the peasants' income from growing grain and ensuring the stable and increasing production of grain in China. Under the current complicated situation in the grain market situation at home and abroad, we must adhere to the bottom-line thinking, adhere to the principle of attaching equal importance to market-oriented reform and protecting the interests of peasants, adhere to and improve the policy of minimum purchase prices for rice and wheat, stabilize the confidence of grain farmers, and firmly adhere to the bottom line of "growing grain and selling it."
On October 23, the State Grain and Material Reserve Bureau issued a notice on the implementation plan for the minimum purchase price of medium and late rice in Anhui Province in 2021, indicating that the minimum purchase price of middle and late rice in Anhui Province has officially begun.
Third, several major factors affecting the trend of the rice market in 2021/22
1. Inventory digestion in the previous year was slow
Taking Hubei Province as an example, the current rice inventory of rice enterprises is still at a high level. According to the monitoring data of the grain and oil market in Hubei Province, as of the end of September, the commercial inventory of rice in the enterprises in Hubei Province was 1.91 million tons, down 670,000 tons from the previous month, and increased by 483,000 tons, 610,000 tons and 600,000 tons respectively from 2018 to 2020. Some large-scale enterprises with better storage conditions have converted rice processing into rice preservation in order to maintain the operating rate. The commercial stock of rice in the unified enterprises was 288,000 tons, an increase of 0.5 million tons from the previous month, and an increase of 121,000 tons, 112,000 tons and 76,000 tons respectively from 2018 to 2020.
2. A bumper harvest of new grain is in sight
From 2016 to 2020, China's rice planting area showed a fluctuating decline trend. According to the National Bureau of Statistics, China's rice sown area in 2020 was 30.08 million hectares, an increase of 386,500 hectares or 1.3% year-on-year. From the perspective of yield, due to the continuous improvement of China's rice planting technology, the single yield of rice in China has continued to rise, and the total yield of rice has basically not declined too sharply because of the decline in planting area. According to the National Bureau of Statistics, China's rice production in 2020 was 212 million tons, an increase of 2.25 million tons or 1.1% year-on-year.
Zeng Yande, chief agronomist and director of the Department of Development Planning of the Ministry of Agriculture and Rural Affairs, said on the 20th that grain production will hit a record high in 2021 and remain above 1.3 trillion jin for 7 consecutive years.
3. The price difference between rice at home and abroad is still large, and the power of rice imports has not decreased
According to the monitoring of the National Grain and Oil Information Center, the current wholesale price of early indica rice in Guangdong is 3800 yuan / ton, vietnam's 5% crushing rate rice to port tax payment price is 3240 yuan / ton, the domestic and foreign price difference is 560 yuan / ton; Thailand's 5% crushing rate rice arrival taxable price is 3027 yuan / ton, the domestic and foreign price difference is 773 yuan / ton; the price difference advantage of imported Thailand and Vietnam rice is basically 500 ~ 800 yuan / ton, while imported Pakistan, India and other countries can still maintain the price difference of 1000 yuan / ton.
4. The impact of the volume of purchase in the city on the future market of rice
On October 23, Anhui Province launched the 2021 mid-to-late Rice Tor City acquisition plan, which marks that the recent purchase policy of the city that everyone has been paying attention to has finally landed, this news undoubtedly boosts confidence in the rice market that continues to be weak, and can also form a bottom support for the rice market at this stage, and the rice market will also show signs of stabilization in the short term, but there is no obvious rebound condition at present.
As we all know, the national entrustment city acquisition policy stipulates that the deadline for the acquisition of the indica rice producing area is January 31 of the following year, and the deadline for the acquisition of the japonica rice production area is February 28 of the following year. China's 2022 traditional festival Spring Festival is February 1, according to traditional customs, rural residents have to buy New Year goods half a month in advance, and the Spring Festival until the fifteenth day of the first month is to visit relatives and friends, so that we can basically calculate the effective time of the purchase of the city, but also to exclude the time of normal acquisition and warehousing due to rainy weather and other factors.
This year's planting costs have risen year-on-year, compared with the same period of the previous year, the sales price gap is too large, growers generally have a reluctance to sell, has been dried and merged into the warehouse of grain, in the case of no significant increase in sales prices, growers are less willing to sell.
In addition, due to factors such as storage safety and standardized management, the storage methods of the old, old, dangerous warehouses and other warehouses and the storage methods of leasing private enterprise warehouses this year are excluded from the acquisition points of the trust city, so it is difficult to say how much acquisition volume can be achieved in such a short period of time, and at present, the other indica rice production areas and the main japonica rice production areas in northeast China have not yet made it clear whether to start the acquisition of the city and the starting point.
4. Comprehensive analysis and recommendations
Combined with the raw grain inventory of rice processing enterprises in the previous year, the supply of new grain markets and the import of rice, if there is no large-scale start of the acquisition of the city, or an appropriate extension of the acquisition time, the acquisition of the city does not reach a certain volume, the stabilization of the rice market is only temporary, and there will be a bottoming process after the Spring Festival. It is therefore recommended that:
1. Large grain growers should actively sell to avoid risks
According to the current situation of rice purchase and sale, the start of the purchase of the city is first of all a major positive for the majority of growers, at least do not have to worry about the difficulty of grain sales or the low sales price to bring losses, it is recommended that large growers try to seize the opportunity to sell in a timely manner, so as to avoid the market after the city acquisition stops the market again appears weak.
2, see the good to put away the bag for safety
If the drying manufacturers and pre-purchase points in stock can be sold at a favorable price, if some of the grain with a higher cost than the purchase price in the early stage is not sold in time, it is advisable to split the low-cost part of the grain and sell it in a timely manner, and the high-cost part that cannot be sold at the same price should be sold at the opportunity to diversify the risk.
3. Lessons from the past, do not repeat the mistakes of the past
According to the current situation that the rice market is still weak and the purchasing entities continue to hold a wait-and-see attitude, it is recommended that rice processing enterprises should still take light inventory as appropriate, ensure that the grain required for daily order processing can be used, and order orders on the market, and it is not appropriate to build large-scale inventory before the rice market situation is unclear and stable.
(The above market analysis part is a personal opinion, the recommended part is for your reference only, and there is no investment direction)