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In this year’s international market, the biggest variables are energy and food.

Looking back at this year’s crude oil market, crude oil prices have fluctuated at high levels since the beginning of this year. After the conflict between Russia and Ukraine broke out, oil prices experienced two relatively large jumps in March. Both crude oil and Brent oil once exceeded the $130/barrel mark, setting a new high since 2008.

However, as a series of "remedial" measures and other bad news came, oil prices have fluctuated and fallen since then, but they have basically hovered around US$100 per barrel.

The main negative factors are as follows:

First, although geopolitical conflicts continue, the market's concerns about the sharp fluctuations in crude oil prices caused by the conflicts have gradually declined.

Or to be more precise, as the conflict has lasted for more than a month, the worry cannot remain at a high level, and the impact on the market will naturally become smaller.

Second, due to the sharp rise in oil prices, downstream demand has been destroyed, and demand has weakened to a certain extent.

The International Energy Agency predicts that global oil demand growth will decline to 99.4 million barrels per day in 2022, a decrease of 260,000 barrels per day from the previous year.

Third, the International Energy Agency and the U.S. government recently announced that they will release a total of 240 million barrels of crude oil strategic reserves, which will also alleviate the market gap to some extent in the short term.

However, although there are many negative factors, it is difficult for oil prices to plummet.

First of all, after the second quarter, the crude oil market will enter the traditional peak consumption season, and demand will naturally gradually turn from weak to strong.

Second, according to OPEC, due to relevant sanctions, Russian crude oil exports will decrease by 7 million barrels per day, instead of the 3 million barrels per day expected by the International Energy Agency. Therefore, although there are 2.4 100 million barrels of crude oil reserves have been released, but it is obviously almost impossible to fill such a huge gap.

Third, global inventories are currently at a low level. When combat readiness reserves are released again, the crude oil market will lack the buffering power to withstand fluctuations. Once the market fluctuates, oil prices may fluctuate more violently.

It was also under the influence of these many factors that on April 12, international crude oil prices regained their lost ground again, with US oil rising back to US$98/barrel, an increase of 3.9%; while Brent crude oil It returned to above 100 US dollars, reaching 102.7 US dollars per barrel, an increase of 4.3%.

Therefore, in the short term, negative and positive factors are interfering with each other, and the crude oil market may temporarily stabilize at a high level.

However, in order to stabilize oil prices, the U.S. government recently exempted a ban, which may cause another change in the corn market.

Recently, the U.S. government issued an emergency exemption from the ban on the sale of high-concentration ethanol gasoline in the summer, and will allow the sale of ethanol gasoline blended with 15% from June to September.

In my country, the use of corn and other grain and oil products to produce biofuels is strictly controlled, but in Europe, the United States and other regions, the use of grain and oil to produce biofuels is extremely common.

From 2021 to 2022, the total amount of corn consumed in the United States for fuel production is approximately 136 million tons, accounting for 35% of the total corn production in the United States in 2021, equivalent to 73% of the total global corn trade. .

The current oil price has soared to around 100 US dollars. According to calculations, when the oil price exceeds 75 US dollars per barrel, it is profitable to use corn to make ethanol fuel. Although the current corn price has also risen sharply, it is relatively Compared with the high oil prices, there is still room for profit.

After the above-mentioned ban is relaxed, it means that more corn will be "burned" and the overall demand for corn will increase.

On the other hand, the price of chemical fertilizers has soared this year. Previous planting intention reports in the United States have shown that American farmers are significantly more willing to plant soybeans, and soybeans and corn are in love with each other, which also means that corn planting will be reduced.

The decrease in supply and the increase in demand have undoubtedly laid the groundwork for price increases in the corn market.

This reaction is already showing. On April 12, the price of U.S. corn futures once rose to a high of $7.79 per bushel, a new high since March. Since the beginning of this year, the increase in corn has exceeded 30%.

The market was once doubtful about whether increasing the use of corn to make biofuels can effectively stabilize high oil prices, but this will undoubtedly play a huge boosting role for the corn market.

Therefore, it is foreseeable that the changes in the corn market will not be small in the future. This turmoil about food has just begun

Welcome to collect "New Agricultural Outlook" and learn about the next three aspects of the new era together new developments in agriculture.