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The skyrocketing price of chemical fertilizers may lead to a reduction in rice production in Southeast Asia! This matter is worth talking about.
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There are three things that have been discussed more recently: first, the rising energy prices, second, the soaring food prices, and third, the shortage of chemical fertilizers.

And these three things are interrelated, interactive and superimposed, which once again affect the market fluctuations in these fields.

Since the beginning of this year, due to the high price of chemical fertilizer, the food industry has been worried about the shortage of chemical fertilizer.

Recently, there is a news related to grain production, which many people may not notice, but the new agricultural concept thinks that we should pay attention to it.

1. Rice in Southeast Asia faces the risk of yield reduction.

The most important staple food in the world is rice.

When we collect the trend of corn, wheat and soybean, we often pay little attention to rice, because the price of rice is relatively stable when the price of other food crops fluctuates greatly.

For example, when the Russian-Ukrainian conflict led to a sharp rise in global food prices, rice prices did not rise. In March, the global transaction price of rice was $405/ton, even lower than the price when the conflict between Russia and Ukraine broke out.

However, due to the continuous rise of global fertilizer prices, it has had an impact on the cultivation of crops around the world, and the cost has increased greatly, which has made the rice market begin to change.

The global rice cultivation is mainly distributed in the monsoon regions of East Asia, Southeast Asia and South Asia, and the problem of chemical fertilizer has also affected rice farmers all over Asia. Whether in India, Vietnam or the Philippines, the price of fertilizer has increased by 1-2 times in the past year.

The increase in the price of chemical fertilizers has caused many rice farmers to reduce the use of chemical fertilizers. According to the prediction of the International Rice Research Institute, if this continues, the rice yield in the next season may be reduced by 10%, about 36 million tons of rice, equivalent to the rations of 500 million people.

Second, the rice crisis

Why are we so sensitive to the change of rice? Because in the past, there was indeed a global food crisis triggered by the rice crisis.

In 2008, the collapse of Lehman Brothers triggered a global financial crisis. Almost in the same year, Vietnam imposed a ban on rice exports, which triggered a global food crisis.

After Vietnam issued a ban on rice exports, India and Cambodia followed suit. For a time, the market panic spread rapidly, and countries began to snap up rice, and the price of rice soared. In just eight weeks, the price of rice rose from 480 USD/ton to 1 100 USD/ton.

Looking back at the last rice crisis, we can find two problems:

First, the price transmission mechanism is not smooth.

In order to curb inflation, India once closed the wheat and rice trading on the futures exchange, but the prohibition of price signals could not really control the price itself, and finally a retaliatory rise broke out.

Second, rice is the last and most important link in the food crisis.

Looking back at the process of grain price increase, we will find that before the price increase of rice, both wheat and soybean increased greatly, because rice is neither the main crop of grain exporting countries nor the main raw material of biofuel, so it became the last affected variety.

However, as an important ration (none), the market fluctuation caused by rice is also more intense.

Third, the risk of a global food crisis has increased.

Why is the risk of global food crisis increasing?

Because two important rations in the world-wheat and rice-have changed.

The conflict between Russia and Ukraine first affected wheat, because both countries are big wheat exporters, accounting for 29% of global wheat exports.

Therefore, after the outbreak of the Russian-Ukrainian conflict, the price of wheat was pushed to a record high, and many countries began to snap up wheat to ensure their own food supply.

Although rice is relatively stable at present, it also faces risks:

One is the change of weather.

Agriculture is an industry that depends on the weather, not only in China, but also in the world. Bad weather has been threatening agricultural production.

Second, the shortage and high price of chemical fertilizer directly raised the planting cost. If it continues to rise, farmers will reduce or even use chemical fertilizers, resulting in reduced production.

This requires countries to adopt corresponding policies and increase subsidies to reduce this risk.

Third, with the rising prices of wheat and corn, and the turn of global food trade caused by conflicts and sanctions between Russia and Ukraine, food protectionism in various countries began to rise. If the grain market is too tight, it is easy to cause panic.

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However, the good news is that since the last rice crisis, countries around the world have begun to pay attention to improving rice production and stocks. After years of efforts, global rice stocks are currently at a high level.

According to the data of USDA, global rice stocks are expected to increase to a record 654.38+900 million tons from 2002 to 2022, which is more than 150% higher than 75.4 million tons before the last crisis.

Finally, let's take a look at the rice situation in China.

Compared with wheat and corn, China has the most abundant rice stocks.

Although the domestic rice market has shown signs of rising recently, according to analysis, it is mainly affected by the rising prices of corn and wheat. Under the consumption mentality of "new rice and old noodles", the japonica rice market began to rise first.

However, due to the high inventory and the incomplete integration of the domestic grain market with the international market, the increase of domestic rice is relatively limited.

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