CPI tick higher; Rapeseed oil auctions; Farmers regain access

March CPI shows sharp rise in vegetable prices

China’s consumer price index rose 1.5% year on year in March, up from 0.9% in February.

Pork prices were down 41.4% y/y which contributed to a drop of 0.83% to the total CPI figure.

Beef prices were flat, mutton fell 4.6%, and aquatic products rose 4.2%.

For other food items, prices all firmed. Eggs jumped 7% y/y, milk was up 0.4%, fresh fruit gained 4.3%. Fresh vegetable prices were up by 17.2%, contributing a rise of 0.37% to CPI.

Due to the decline in pork prices, the food price component of the index fell year on year. However, all other 7 components of CPI rose.

The plummet of pork prices over the past year has helped offset rising consumer prices in other areas such as fresh vegetables, fuel, and energy costs.

While pork prices are unlikely to rebound sharply in the near future given the oversupply in the hog industry, it is also difficult for them to fall further and offset rising prices in other categories for the rest of this year.

Inflationary pressure in food is likely to build in coming months as the sharp price increases in wheat and vegetable oils start flowing into retail prices.

More rapeseed oil auctions as cash prices hit new high

China’s state stockpiler is to put more of the country’s rapeseed oil reserves for sale as domestic cash prices for the edible oil hit a new record high.

Nearly 13,000 tons of rapeseed oil reserves produced in 2020 will be auctioned this Thursday in northern and central China.

More than 106,000 tons of rapeseed oil reserves have already been offered for sale through state auctions this year, all of which were carried out within the past month as prices continued to climb.

The move came against the backdrop of a rising rapeseed oil price that has gained nearly 4% since the beginning of 2022 to a new record high of 13,780 yuan/ton ($2,163/ton) last week, according to data from the Ministry of Commerce.

The main rapeseed oil futures contract for September 2022 delivery in China continues to trade near its recent high, closing at 12,529 yuan/ton ($1,967/ton) on Monday.

Chinese cities allow farmers to return for spring planting

On Saturday, the city of Jilin in northeastern China held a Covid prevention press conference where officials said that 80.1% of farmers in the city have been allowed to leave the city and return to their hometowns to prepare for spring planting.

Covid cases in Jilin city have been falling recently, however cases in Jilin province remain elevated. The capital city of the province Changchun reported 845 new cases on Sunday.

Covid restrictions have led to rising concerns of corn and soybean planting delays in northeast China as many young farmers who are living in cities have been barred to return to the countryside to facilitate plantings.

Farmers who reside in the countryside are mostly elderly people who need assistance from their younger family members for planting and harvest.

Crop update: rapeseed crops start maturing, spring wheat planting expands

About 3% of China’s current rapeseed crops have matured and the majority of crops remained in blooming phase, according to the National Meteorological Center on Monday.

Rapeseed crops in southwestern and central parts of China have begun to mature with the rest to follow this month.

Rapeseed harvest in China normally start in May each year.

The country is expected to produce a new record amount of 14.5 million tons of rapeseed this year.

For spring wheat crops, plantings have stretched from northwestern China into the northeasern parts of the country.

Around 30% of currently planted crops have started to spout.