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In the past year or so, under the leadership of crude oil, many of the world's commodities have fallen into a cycle of falling, including a large number of agricultural products (11.75 -0.09%, buy).
On the surface, crude oil has nothing to do with agricultural products, but in fact, as the financial properties of crude oil become more prominent, it has been used more and more as one of the indicators to measure market inflation. Its rise and fall will inevitably affect agricultural products. . At the same time, because crude oil is one of the basic raw materials in many production industries, agricultural machinery, pesticides, fertilizers, fuels, etc. used in agricultural production and transportation have their own appearance, so the price of crude oil will also affect agricultural products indirectly through the production chain. price.
In addition to the above two, among the many varieties of agricultural products, there are several varieties with deeper entanglements with crude oil. This is what we are talking about today about biofuels, corn, oil and sugar.
Crude oil market
What happened to crude oil?
This will start from 2014. In that year, the Ukrainian civil strife and Russia incorporated Crimea into the Russian Federation, forming confrontation with the United States and NATO countries. The United States and NATO’s joint sanctions have become the direct trigger for the fall in oil prices, opening up the crude oil market for a long time. The prosperous prelude.
In June 2014, the US New York market crude oil futures was 106 US dollars / barrel, and on December 16, it plunged to a low of 53.60 US dollars / barrel, a drop of 55%, breaking the low of 54 US dollars / barrel on October 1, 2005. . In the first half of 2015, there was a rebound, but as the six countries signed a final "Comprehensive Comprehensive Action Plan" with Iran, crude oil prices have entered the downward channel, and the Yangtze River has never gone back.
The root cause of the collapse in crude oil prices is nothing more than oversupply.
On the supply side, OPEC and non-OPEC countries compete for market share and insist on not reducing production, which leads to excess supply of crude oil in a short period of time. At the same time, Iran, which has 10% of the world's crude oil reserves and nearly 20% of its natural gas reserves, is bound to become another force that cannot be underestimated after the lifting of the ban. Contrary to the hot supply, the consumer side is light. With the global economic slowdown, the market demand for oil and gas is also declining, which has led to a pattern of global crude oil supply exceeding demand.
The price of oil that has been overwhelmed is only falling and falling. Until now, everyone is still waiting for news that oil prices bottom out.
Observation conclusion: Supply exceeds demand for crude oil without bottom
Biofuel-related agricultural products market
The biofuels that have emerged in recent years are solid, liquid or gaseous fuels composed or extracted from biomass. The important plant sources are corn, soybeans, sugar cane and other crops. As a new environmentally friendly energy source, biofuels and crude oil are substitutes, so the corresponding varieties have a connection with crude oil in addition to the production chain--competition.
Crude oil showed a general downward trend and experienced two large and rapid declines, starting from the middle of June 2014 and the second from the end of June 2015. Similarly, corn is also on a downward trend, with two sharp declines, starting with the first time in early May 2014 and the second from mid-July 2015. The trend and time point of the two are consistent.
This is because corn is an important raw material for fuel alcohol, accounting for 50% of all agricultural raw materials, and has an intuitive alternative relationship with crude oil. Crude oil prices have fallen, and the price of alcohol is also expected to decline to ensure market share, which has dragged down corn prices and tended to converge.
Soybean oil and palm oil also showed a general decline from the second half of 2014, and there were two significant sharp declines. The first time began in late June 2014 and the second time began in mid-July 2015 and late July. It is basically consistent with the trend of crude oil and the timing of the decline.
As a raw material for biodiesel, fats and oils also compete with crude oil, so the trend of the three is the same.
Sugar prices also showed a general trend of decline, and there were two sharp declines. The first time from the end of June 2014, the second time from the beginning of July 2015. It is basically consistent with the trend of crude oil.
The reason sugar is similar to crude oil is that sugar cane is one of the raw materials for fuel alcohol. When crude oil prices fell, alcohol production decreased, and more sugar cane turned to produce sugar, which led to an increase in sugar production and a fall in prices. Therefore, the rise and fall of sugar and crude oil are also relatively synchronized.
Therefore, corn, oil, and sugar are affected by the relationship between biofuels and crude oil, and the overall price trend is relatively synchronized.
Moreover, due to the relatively high cost of biofuels, biofuel production has generally declined as crude oil prices have fallen, which has also reduced the consumption of agricultural products, resulting in accumulation of stocks, further dragging prices.
Observations: Biofuels are implicated in corn fat and sugar falling
Predictive analysis
At present, the eyes of the whole world are focused on the news that crude oil will reduce production. Last week, Saudi Arabia, Venezuela, Russia and other countries reached an agreement to freeze crude oil production at the level of January 11 and no longer increase.
However, many analysts believe that the level of January 11 is still the high output of crude oil, and this agreement may not be able to really reduce crude oil production.
And the latest data released by the American Petroleum Institute (API) at 05:30 on March 2, Beijing time, showed that US crude oil inventories increased by 10 million barrels last week. As soon as the news came out, the US WTI crude oil and Brent crude oil immediately fell into a more violent downturn. WTI crude oil fell more than 2%, and Brent crude oil fell more than 1.4%.
The price of oil that has just shown signs of bottoming may still fall, and the bottom line of oil prices is unknown.
However, it is also falling, and the relationship between crude oil and agricultural products is changing quietly. According to industry insiders, in the past year and a half, food prices have outperformed crude oil prices, and the price of food has fallen far less than crude oil. This has changed the price ratio of grain to crude oil. The price ratio that has been hovering at a double low in the past 10 years has returned to a level four times.
In this process, the impact of crude oil on corn, oil, and sugar is less than that in the period when biofuels have just emerged, and price fluctuations are more independent. The supply and demand relationship of the varieties themselves has a more pronounced effect on prices. Therefore, it is necessary to pay attention to the supply and demand factors of the varieties themselves in the short term.
Analysis conclusion: crude oil bottomless biofuel-related agricultural products are difficult to improve
Conclusion
The plunge in crude oil has led to a decline in the number of biofuel-related agricultural products, such as corn, oil and sugar.
However, as the bottom line of crude oil prices is still being refreshed, the market is still not hoping for bottoming, and the price of agricultural products can be freed from the absolute control of crude oil in a short period of time, which in turn is determined by the relationship between supply and demand.
However, as mentioned at the beginning, crude oil as the leading commodity, will still affect the entire market atmosphere, and agricultural products are no exception. Coupled with the direct substitution relationship, in the long run, corn, oil, sugar and other biofuel-related agricultural products will continue to be affected by crude oil, and it is difficult to continue to rise.
Observation cause