Why do agricultural products always surprise people?

Agricultural products have become the focus of the market recently: not only farmers' markets, but also Wall Street.

Since August, in the vegetable market, which is closely related to people's lives, many citizens have found that vegetable prices have soared, round eggplant has become a "treasure", cucumbers have become "golden melons", and even cabbage is no longer a "cabbage price". They originally wanted to wait, but later found that if they thought so, there would be no chance to eat.

Also in August, in the treacherous commodity markets, many traders are confidently betting on long agricultural prices, as satellite images show that a reduction in US agricultural production is "almost certain". However, bulls waiting for the "authoritative" guidance of the US Department of Agriculture (USDA) report not only failed to usher in the "last straw" that crushed the bears, but even suffered heavy losses in the "biggest historical deviation" in the USDA's monthly report.

Why the agricultural market surprised the aunt and traders, is it because of the uncertainty of USDA, "unfathomable", or the mischievous "disturbance" of El Ni ñ o "Bruce Lee"?

Agricultural products: take farmers' markets and Wall Street by surprise

"this round eggplant is as expensive as a treasure!" In mid-August, at a farmers' market in Beijing, Miss Wu, a citizen, told reporters that she was greatly shocked by the recent price of round eggplant. "it was less than 1 yuan per jin in July, and it went up to 2 yuan in a few days. Let's wait until it's cheaper."

However, Miss Wu found that if she waited for it to be cheaper, she would not have to eat a lot of food. In August, the prices of many kinds of vegetables have risen sharply. For example, compared with the price at the end of July, beans have risen by 1.5 yuan per jin, the price of pakchoi has doubled, and cucumbers have become "golden melons".

Data show that on August 7, the weighted average price of vegetables in Xinfadi market was 2.60 yuan / kg, up 9.24% from 2.38 yuan / kg on July 31, and 61.49% higher than 1.61 yuan / kg in the same period last year. The year-on-year increase is even more alarming.

The rise in vegetable prices is also reflected in the Consumer Price Index (CPI). According to the latest data released by the National Bureau of Statistics on Aug. 9, fresh vegetable prices rose 10.5% in July from a year earlier, catching up with the pork prices of the "leading" CPI.

In fact, the recent changes in agricultural prices not only puzzled the citizens in the farmers' market, but also surprised the agricultural traders in the capital market.

Since August, many traders have bet on long agricultural prices, as early satellite image data point to a "near certainty" of a reduction in US agricultural production. At that time, daily infrared images sent back by satellite showed that there was too much rainfall in the Midwest from June to early July, which would lead to a decline in corn and soybean production.

Most relevant agencies also agree on the pressure on US agricultural products to reduce production this year. According to foreign reports, Descartes Labs, which provides agricultural satellite remote sensing data analysis services, predicts that corn production in the United States this year will be 13.34 billion bushels, down 6.4 percent from last year and below the 13.53 billion bushels expected by the USDA last month. Los Alamos expects U.S. corn yields to be 164.9 bushels per acre, down from last month's 168 bushels and also below the USDA's forecast of 166.8 bushels last month.

August 12th is the date of publication of the USDA report. Traders before the Armageddon waited confidently for the most "authoritative" report to come to the conclusion of a cut in production, pressing down the "last straw" for moribund bears.

However, as soon as the USDA report came out that day, long traders freaked out. In the World Agricultural supply and demand report (WASDE) in August, USDA unexpectedly raised its agricultural production forecast, and the forecast exceeded the market forecast: U.S. corn production in 2015 and 2016 is expected to be 13.686 billion bushels, the third highest in history, with a yield of 168.8 bushels per acre. Us soybean production is expected to be 3.916 billion bushels in 2015 and 2016, up from 3.885 billion bushels forecast in July and down from 3.969 billion bushels the previous year.

This result is not only much lower than most institutions' forecasts, but also close to the low end of market forecasts. It is an almost indisputable fact that the USDA report is the largest deviation in the history of USDA's monthly report (between USDA report estimates and average market estimates). " Industry insiders say.

This "slap on the head" has brought great shocks to the capital markets. On the same day, the most actively traded December contract in the CBOT corn market closed at $3.68 a bushel, down 19.5 cents, or 5.03%, from the previous day, while the September wheat contract closed at $4.9225 a bushel, down 15 cents, or 2.96%, from the previous day. The November soybean contract closed at $9.1 a bushel, down 61.5 cents, or 6.33%, from the previous day.

The domestic futures market also declined sharply, and the spot soybean meal also fell sharply. The price of soybean meal in the main coastal port areas fell to 2700-2800 yuan / ton, a decline of 30-100 yuan / ton, and the bulls suffered heavy losses.