Barclays: Hike of Grain Commodity Price around the Globe not to Lead to Inflation in China

By CnAgri2012-08-22 13:12:02 Print

The once in fifty years draught in the central and western parts of the US has spurred substantial price hike for corn, soybean and wheat. Barclays points out in its report that the emerging countries have the capability to cope with this round of global grain price growth thanks to slowing down of the macro economy, improvement of logistics and slide of energy price.

The market concluded the recent price hike for grain in the world has brought risk for China, since food inflation is the main force for inflation in China.

Barclays stated China's inflation target is 4% in 2012, the year on year CPI growth in June was 2.2%, whereas the average growth from the beginning of the year has been 3.3%. Therefore only a significant growth of price for food in the latter half of the year shall restrain the relaxation of the currency policy of the Central Bank. Currently it is rather the house price than the food price that is restraining the action of the Central Bank.

According to Barclays, the inflation risk is low in China in the near future. "First, the positive climate situation and the current stage of the swine farming cycle indicate both pork and grain supply shall keep steady in 2012. Second, food inflation in China is decided by the domestic factors. Third, three factors play an important role in pushing high the inflation, which are forecast on inflation, stock piling and speculation. These three factors emerge at inflation environment and are enforced."

From "China Sugar Market Monthly Report"