3、 Price trend and influencing factors of early indica rice

　　 （1） Price trend characteristics of early indica rice

1. The price of early indica rice fluctuates greatly and frequently

Due to its low value and wide use, it is not only used as the main grain reserve, but also has a strong industrial attribute. Since 2004, the purchase and sales market has been completely opened. The price of early indica rice is not only affected by the basic factors such as the national policy, the supply and demand pattern of early indica rice, but also affected by the national macroeconomic situation, the competition in the purchase market, and other large quantities agriculture products The price comparison, planting costs and benefits, logistics and transportation costs, international market prices, weather, natural disasters, farmers' reluctance to sell and other factors have made it an active variety of rice, with large price fluctuations and high frequency.

Since 1996, the price of early indica rice has been declining from about 1700 yuan/ton in 1996 to about 800 yuan/ton in September 2000, a drop of more than 50%, due to successive bumper harvests and oversupply. Especially since 2003, influenced by domestic and foreign factors, the price of early indica rice in China has fluctuated repeatedly. Since 2004, China has fully liberalized the grain purchase and sales market, and the main body of the early indica rice purchase and sales market has increased significantly, with very fierce competition. At the same time, as the demander of early indica rice is mainly grain reserves at all levels, large-scale consumption of unit rations and rice flour processing, the grain reserves are relatively stable under the constraints of government plans, but the price demand for unit rations and rice flour processing is more flexible, leading to an increase in the price fluctuation of early indica rice. After a sharp fluctuation of about 40% in 2003-2004, From 2005 to 2006, the fluctuation was significantly reduced under the guidance of the national minimum purchase price, but from the end of 2006 to 2007, there was another round of significant increase. The price difference between 2006 and 2007 was 300 yuan/ton, with a fluctuation of about 21.4%.    

The price of early indica rice fluctuates frequently. Taking Jiujiang, Jiangxi Province, the main early indica rice producing area in China, as an example, the ex warehouse price of early indica rice rose from 920 yuan/ton in June 2003 to 1260 yuan/ton in December, and then rose to 1760 yuan/ton in March 2004, and then gradually declined, falling to 1320 yuan/ton in July in 2005 at the lowest level. The level in 2006 was basically flat, and then rose to more than 1760 yuan/ton at the highest level in August 2007, entering September, With the gradual listing of medium indica rice, the purchase price of early indica rice generally fell to around 1600 yuan/ton at the end of September. Then, driven by the international rice price, the price of early indica rice rose rapidly until about 1900 yuan/ton in the purchase season in 2008.    

2. The price of early indica rice is greatly affected by the policy, but due to various other factors, the price independence is also strong

Since 2004, the national policy has given greater support to the price of rice, showing obvious effect of supporting the market. In 2005, after the implementation of the purchase plan for the minimum purchase price of early indica rice was officially launched on July 28, the effect of supporting the market was obvious. The price of early indica rice rose rapidly from 62-65 yuan/100 jin before the launch to 70 yuan/100 jin, driving the market price of early indica rice up by 5-8 yuan/100 jin, basically rising above the policy base price. The policy of purchase controls most of the food sources. The centralized auction also regulates the market supply and stabilizes the sales price.    

In 2006, the minimum purchase price policy was announced earlier. Because the policy was clear and farmers knew it well, they would not sell it at low prices. In addition, all kinds of subjects actively entered the market for purchase, and the competition was relatively fierce in previous years. In addition to the impact of disaster and yield reduction, the purchase price of early rice rose by 3-6 yuan/100 kg year on year.    

In 2007, the market price of new early indica rice in South China rose from 73-74 yuan/100kg at the beginning of listing to 77-78 yuan/100kg, and even reached 88 yuan/100kg in some places. By the end of August, the purchase price of various places had reached the highest point in succession, mostly between 85 and 88 yuan/100kg, creating a new record high, resulting in the failure to launch the lowest purchase price plan. Therefore, although the policy price has become the dominant price in the market, the influence of many factors, which promote the market price, will also lead to the corresponding increase in the policy price, and will affect the future market trend.  

In 2008, supported by such factors as the national policy base price guarantee, diversified purchase entities actively entering the market, farmers' reluctance to sell, frequent disasters leading to production decline, rising prices, and international rice prices, the purchase price of early indica rice continued to rise, and the opening price was generally around 1900 yuan/ton, about 27% higher than the 1500 yuan/ton in 2007, Some sales areas reached a historical high of 2100 yuan/ton. After the end of the purchase period and the off-season of consumption, the price of early indica rice dropped significantly.

 

3. The price seasonality of early indica rice is obvious. Because the production of agricultural products has cyclical characteristics, the agricultural product market also has obvious seasonal characteristics. Generally speaking, in March and April, early indica rice processing enterprises are consuming inventory, purchasing is weak, and early indica rice consumption is also in the off-season, with low prices; Around June, prices began to rise due to lack of opportunities; 7. August is in the peak season of early indica rice sales, but due to fierce acquisition competition, the price is often relatively high, and there is an off-season market; 9. After the mid late indica rice came into the market in October, the price of early indica rice began to fall gradually; In the peak consumption season around the end of the year, the price of early indica rice began to rise again. Since the specific situation of supply and demand is not exactly the same every year, sometimes there will be an anti seasonal market due to the serious decline of supply.

Price trend of early indica rice purchase in Jiangxi Province, Hunan Province, 2004-2009

 

（2） Factors Influencing the Price of Early Indica Rice

　　 With the deepening and accelerating of the marketization of rice production and circulation, the rice market is no longer a separate interpretation. It is not only affected by national policy factors, the supply and demand of early indica rice and other fundamental factors, but also closely related to the development of the whole country's macro-economy, linked with the price of other agricultural products, and affected by weather, natural disasters, psychology and other uncontrollable factors.

1. Supply and demand

Supply and demand are the fundamental factors that determine the price of rice. The supply side is mainly composed of three aspects: (1) early inventory. It is an important part of the total output. The amount of early inventory reflects the tightness of supply. The price of supply shortage rises while the price of supply surplus falls. (2) Current production. Current production is mainly affected by planting area and unit yield. The planting area is mainly affected by the comparative income of farmers and other agricultural products, national agricultural policies and other factors, and the unit yield is mainly affected by weather, scientific and technological level, etc. It is necessary to study the changes of rice planting area, climate, crop production conditions, production costs, and government agricultural policies. (3) Imports of goods. The actual import volume of goods often changes for political or economic reasons. Therefore, we should try our best to timely understand and grasp the international situation, price level, import policy and import volume changes.

Demand: It usually consists of domestic consumption, export volume and ending commodity balance. (1) Domestic consumption. It is not a fixed constant, but is affected by many factors. Mainly include: changes in consumer purchasing power, population growth and structural changes, government income and employment policies. (2) Export volume. In the case of a certain output, the increase of export volume will reduce the supply of the domestic market; On the contrary, the decrease of export will increase the domestic supply. (3) Closing commodity balance. This is one of the most important data for analyzing the trend of futures commodity prices. If the inventory increases at the end of the year, it means that the supply of goods is greater than the demand, and the futures price may fall; Otherwise, it will rise.

From the perspective of production over the years, due to the particularity of early indica rice varieties, agricultural policies, adjustment of planting structure, scientific and technological progress and other factors have a greater impact on the area and yield of early indica rice, which has caused the price of early indica rice to fluctuate significantly. In addition, the changes in early indica rice stocks, the rotation of stored rice, the quantity and price of grain delivered from the market also affect the supply of early indica rice and thus the price of early indica rice. In terms of consumption, early indica rice in China is mainly used for grain ration, national reserves, industrial and feed consumption, showing a steady growth trend on the whole. Due to the large amount of early indica rice used for reserve, the industrial and feed consumption has also increased rapidly in recent years, which has a relatively obvious impact on the market, especially the supply of conventional varieties exceeds demand, and there is still room for price increase. In addition, festival and group consumption effects, changes in imports and exports, etc. will also affect the phased demand of early indica rice market.

2. National policy

The national grain industry policy affects and even dominates the supply and demand and price of early indica rice. First, various preferential agricultural policies have improved farmers' enthusiasm for grain planting, promoted grain production, guaranteed grain planting area and yield, and formed a strong support for the area and yield of early indica rice; Second, the minimum purchase price policy of early indica rice and macro-control policies such as open auction and reserve basically dominated the price trend of early indica rice. In order to stabilize the production of early indica rice and protect the interests of farmers, since 2004, the state has implemented the minimum purchase price policy for early indica rice in Hunan, Jiangxi, Hubei and Anhui provinces (purchase by entrusting the city). In 2008, Guangxi was also included in the policy. In 2005 and 2006, as the market price was lower than the minimum purchase price, the policy was launched for two consecutive years, which achieved obvious effect of supporting the market and protected the interests of farmers.

3. Acquisition market competition

The market situation of early indica rice purchase directly affects the trend of purchase price. After the grain purchase market was fully liberalized in 2004, the number of market participants in the early indica rice purchase market increased, including not only state-owned grain storage enterprises and local storage enterprises, but also industrialized leading enterprises, private processing enterprises and individual traders. The fierce competition promoted the price of early indica rice market

4. Price comparison with other bulk agricultural products

Corn and wheat are important food crops. Their strong demand can best reflect the quality of agricultural economy. In the long run, the price of corn and wheat has a strong correlation with the speed of agricultural economic development. The consumption price relationship between early indica rice and mid late indica rice, japonica rice, wheat and corn is the most important. The changes in the yield, price and consumption of these substitutes will have a direct or indirect impact on the price of early indica rice. The price comparison relationship between early indica rice and other bulk agricultural products will affect the supply and demand of early indica rice, thus affecting the production and marketing of early indica rice, leading to changes in its future price trend.

5. Cost and benefit comparison

The change of seed price, chemical fertilizer, pesticide and other costs for the production of early indica rice directly led to the change of rice price. Its costs mainly include: seed fees, fertilizer fees, pesticide fees, hire harvesting fees, agricultural film fees, rental operation fees, machinery operation fees, fuel and power fees, technical service fees, tools and materials fees, repair and maintenance fees, etc.

The cost income of early indica rice is one of the main factors affecting farmers' enthusiasm for planting. The cost of early indica rice has a certain influence on the market price. Farmers will be reluctant to sell when the market price is too low; The income situation will affect farmers' planting arrangements for the next year. If the income increases, farmers may increase the planting area, otherwise they may reduce the planting area.

In recent years, the rigid increase in the planting cost of early indica rice has provided strong support for the price of early indica rice. In 2007, the total cost increased by 16.52% compared with that in 2004, and the cash cost increased by 30.49%. The average increase of total cost and cash cost over the past four years was 4.09% and 7.03% respectively. The rising cost also drives up the price of grain sold by farmers.

Comparison of production cost and price of early indica rice in Hunan Province from 2004 to 2007

project	two thousand and four	two thousand and five	two thousand and six	two thousand and seven
Total cost (yuan/mu)	four hundred and ten point five four	four hundred and thirty-five point five eight	four hundred and fifty-three point seven six	four hundred and seventy-eight point three eight
Cash cost (yuan/mu)	two hundred and twenty-five point seven seven	two hundred and forty-nine point one nine	two hundred and sixty-eight point seven seven	two hundred and ninety-four point six one
Selling cost (yuan/100kg)	seventy point nine three	sixty-eight point five four	seventy point nine five	seventy-four point four nine

6. Seasonality

The price of early indica rice shows obvious seasonal fluctuation. Generally, the peak season for consumption is from September to October, December to February of the next year, and the price of early indica rice increases; The seasonal consumption slack season is from March to May and from October to November. The demand is weak and the price usually drops; In June of each year, prices begin to rise; 7. August and September are the peak purchase seasons, and the price of early indica rice usually rises.

7. Weather, natural disasters and psychology

Early indica rice is vulnerable to natural disasters such as weather, drought, typhoon, rainstorm, flood, diseases and insect pests during its growth period, which has become the subject of market speculation. At the same time, all parties involved in production and marketing often have different opinions on the judgment of market conditions, and their buying and selling behavior is affected by their bullish or bearish psychology. If farmers are reluctant to sell, which makes the market's food supply limited, it will naturally promote the price rise.

8. International market price

For many years, China's rice self-sufficiency rate has been very high, the import and export volumes are small, and the correlation with the international market is low, so the rice price is less affected by the international market. The same is true for early indica rice, whose price is mainly determined by domestic factors. However, with the development of the international integration process, the price linkage between China's major grain varieties and international grain varieties is growing. The rise or fall of foreign grain prices directly affects the domestic market expectations, and its impact on the price of early indica rice cannot be ignored.