Summary of Key Points
International agricultural product prices have skyrocketed due to factors such as the Black Sea conflict, extreme El Niño weather, and export bans by multiple countries. This has led to a 24% increase in the A-share seed industry sector in August, although there has been significant differentiation among companies (for example, Wanxiang Denong had five consecutive daily price increases, while Qiule Seed Industry saw a 6% drop). Institutions are warning of a global food crisis, noting that rising food prices are driven by supply shocks and the trend of using food as a "weapon," which could also fuel global inflation. However, the performance of the seed industry is largely based on market expectations; short-term valuations deviate from fundamental realities, and in the long term, it will depend on whether companies with core breeding technologies can deliver on their performance promises.
A-share Seed Industry Sector: Strong Growth but with Divergence
The seed industry sector rose by 24% in August, with a massive influx of capital (the scale of food-themed ETFs increased by 960 million yuan this year, with 437 million yuan flowing in the past month). However, individual stocks performed very differently: some had consecutive daily price increases (such as Wanxiang Denong and Xin Sai Shares), while others experienced significant declines (like Qiule Seed Industry).
Why the rise? It's not because companies are currently making large profits, but because the market expects global food prices to continue to rise, and the seed industry, as a upstream sector, is expected to benefit first. Institutions warn that the valuations of many stocks have exceeded their actual operating conditions (for instance, domestic autumn grain production is generally good, with no widespread reductions in output). The sharp short-term increase carries the risk of profit-taking. If the situation in the Black Sea region improves or global supply issues ease, the sector may see a correction.
International Food Price Surge: Three Major Drivers
1. Black Sea Conflict: Russia and Ukraine account for 30% of global wheat exports. With Russian export facilities damaged, wheat exports are expected to decrease by several million tons, and wheat prices have risen by 54% since the beginning of the year.
2. El Niño: This year's El Niño phenomenon could be the strongest in 150 years. High temperatures in the United States have led to reduced corn production (yields have been lowered to 180.7 bushels per acre, below previous forecasts), causing corn prices to rise by 21% this year. Global grain production is expected to decrease by 2.7% in 2026-2027.
3. Export Bans: Many countries, fearing shortages, have restricted exports (by tightening quotas or imposing tariffs), turning food into a tool for geopolitical leverage and further driving up prices.
Food as a Weapon: Trade Sanctions Are More Threatening than Drought
United Nations experts point out that drought alone may not lead to famine, but trade sanctions can exacerbate the crisis. Global food reserves are sufficient, but the distribution is uneven—rich countries have more reserves, while poor importing nations cannot access them. For example, a combination of a severe El Niño and export restrictions could result in an additional 21.4 million people facing hunger.
Food Crisis and Inflation
JPMorgan Chase warns that the next inflationary shock may not come at gas stations but in the supermarket food sections. The core logic is the resonance in the "energy → fertilizer → food" chain: rising energy prices lead to higher fertilizer costs, which in turn increase grain production costs and food prices. There is also a time lag; it takes 3-6 months for commodity price increases to reflect in supermarket food prices. The impact of El Niño on agriculture is delayed by 6-12 months, so inflation could peak in the spring and summer of 2027, with food prices rising and the effects of reduced production becoming more apparent.
Can the Seed Industry Sector Sustain This Growth?
In the short term, market sentiment is driving the gains, which are rapid but carry significant risks. If the Black Sea conflict eases and global supply prospects improve, the sector may experience a pullback. In the long term, only companies with core breeding technologies (such as those capable of biotechnology) can convert their expected value into actual profits. While policies support the seed industry, it is ultimately technology that will increase production and reduce costs, enabling sustainable growth.
In summary, the surge in international food prices is the result of multiple factors. The performance of the A-share seed industry is driven by market expectations, but short-term overheating should be watched out for. The global food crisis not only affects prices but also drives inflation, and ordinary consumers should be aware of the potential rise in food prices.