The price of agricultural products will fall again in July

The data released by the Ministry of Commerce on Tuesday showed that the average wholesale price of 18 kinds of vegetables, the average wholesale price of 8 kinds of aquatic products, and the price of pork dropped by 3.1%, 0.1%, and 0.5% respectively from the previous week (July 25 to July 31). The price of edible agricultural products (000061), which rose for several months, finally showed signs of a complete fall in the last week.

The price of aquatic products fell for the first time According to data from the Ministry of Commerce, the average wholesale price of 18 kinds of vegetables fell by 3.1% from the previous week, and the rate of decline expanded by 1.6 percentage points, of which eggplant, Chinese cabbage and wax gourd decreased by 10.6%, 8.4%, and 7.3% respectively. , white radish and cabbage decreased by 7%, 6.7% and 6.5% respectively. The average wholesale prices of the eight aquatic products stopped falling and dropped by 0.1%, among which small octopus, big octopus and carp decreased by 1.4%, 0.8% and 0.5% respectively.

Following the first week (July 18 to 24) of pork prices fell for the first time in a chain, pork prices continued to fall 0.5% qoq last week, a 0.3% increase in the decline. However, the prices of other meat substitutes are still rising, with beef, mutton, and white striped chickens up 0.5%, 0.4%, and 0.3%, respectively, but the gains have been reduced by 0.1%, 0.6%, and 0.1% respectively.

In addition, continued high temperatures led to a drop in egg production, and the retail price of eggs rose by 0.8%, up 2.3% from the end of June. The retail price of grain and oil rose steadily, with soybean oil prices unchanged from the previous week, and peanut oil, rapeseed oil, rice, and flour rose by 0.6%, 0.2%, 0.2%, and 0.2%, respectively. According to the Xinhua News Agency's national agricultural and sideline products and agricultural materials price system monitoring, since mid-June, the price of rice in the country has continued to rise, and the price of glutinous rice has increased by 21.8% compared to the same period of last year.

At the same time as the total decline of agricultural products, the prices of means of production continued to rise. According to the data monitored by the Ministry of Commerce, the prices of non-ferrous metals, mineral products, chemical products, energy, steel, and rubber rose by 1.7%, 0.7%, 0.5%, 0.4%, 0.3%, and 0.1% respectively over the previous week. Building materials and agricultural prices At the same level, only the price of light raw materials fell slightly by 0.1%.

July CPI may hit new heights Although the prices of edible agricultural products have fallen in an all-round manner, the market's expectation of a new high for inflation has not decreased. Li Liangyu, chief macroeconomic strategist at Changjiang Securities (000783), told reporters that although the Ministry of Commerce’s monitoring data showed a slight fall in pork prices, this was only due to the temporary decline in weather caused by hot weather. It is expected that the pork will continue to rise, and the pork rally is likely to continue until next year's Spring Festival.

According to Shi Yang, a researcher at the headquarters of A&R Securities' research and development headquarters, a certain drop in pork prices in the past two weeks may be due to the increased sales of frozen meat reserves by local governments and the possibility of supplementing market supply through international imports of frozen meat. Because from the point of view of domestic supply alone, it may not be until October after hog supplementation and listing. Until then, pork prices will continue to rise. In addition, most of the remaining agricultural products have declined slightly because of the higher price base than the weekly price chain.

In addition, Li Liangyu said that due to the high price of pork, there has been an alternative increase in the prices of cattle, sheep and chicken. It is expected that this will be a process of accelerating the rise. Taken together, the year-on-year growth rate of CPI food items in July will be around 14.5%, non-food items will be around 2.7%, and the July CPI will be at 6.5%-6.6%, which may again set a new high for this round of inflation.

CITIC Securities (600030) also believes that although the price of meat fell slightly in mid-July, other food prices have risen, so the overall level of food prices is still relatively high. The food price in July is expected to increase by around 1.5% from the previous month. In July, the CPI rose by 0.5% month-on-month and was up 6.5% year-on-year. Shenyin Wanguo predicts that food and non-food prices will reach a new high in July, and the CPI is expected to be 6.7% in July. However, with the tail-tail factor disappearing, CPI is expected to fall in August.

Policy loosening expectations falsified information disclosed by the central bank on Monday’s meeting and showed that China’s monetary policy will continue to be “steady” in the second half of this year and maintain the necessary “policy strength”, while emphasizing that domestic inflation expectations are still strong, and the basis for stabilizing prices is still not firm. At the meeting of the Political Bureau of the Central Committee on July 22, it was clearly stated that "the second half of the year should insist on stabilizing the general price level as the primary task of macroeconomic control," and there is no mention of maintaining growth. All these indicate that the current domestic inflation situation is still severe and it is difficult to relax policy pressure in the short term.

In fact, from the main tone of the series of meetings since July, it can be seen that the policy is still continuing to tighten. For example, the State Council Executive Meeting on July 12 proposed that “second-tier and third-tier cities with excessively high house prices must also take necessary measures to limit purchases”. On July 18th, the person in charge of the Ministry of Housing and Urban-Rural Development only uses “enhancement of policies to consolidate the effects of regulation and control”. Policy: On July 23, the CBRC's mid-year work conference proposed that "we must strictly follow the risk of real estate loans, prohibit credit violations from entering the property market, and platform loans must not be renewed."

Shenyin Wanguo believes that although there was a slight correction in the economy in the second quarter, overall it was better than expected. Under the continuous tightening policy, the economy has such a good performance, indicating that China's economic endogenous growth momentum is strong. Under the background that inflation is high and the economy is better than expected, there is still a need for tightening policies. There is still a large probability of using monetary policy, and there is room for further increases in interest rates and deposit reserve ratios.

Guodu Securities believes that many potential price increase factors have not been eliminated. Whether it is the CPI growth rate or the residents' inflation expectations will remain at a relatively high level, this means that the tighter adjustment tone will not be easily changed. Great Wall Securities also believes that, in a comprehensive view, the third quarter will be the pattern of inflation seeking and bottoming out. Since prices are still the focus of policy control in the short-term, the timing for a complete loosening of monetary tightening is still immature. As policy faces a dilemma of increasing expectations, the capital market will show more of a wait-and-see mood.