Agricultural products rebounded from economic recession

The turmoil in the financial markets triggered by debt problems in Europe and the United States has continued. Historically, the US debt has been downgraded, which has further exacerbated the market’s concern about the global economy’s recession. However, the agricultural product market once again showed defensive nature, and with the weakening of panic sentiment, the market seems to have stabilized. The author believes that the possibility that the financial crisis will eventually turn into an economic recession is still small. The market panic and fear of reinjecting vitality into the capital market will not be too pessimistic about the long-term trend of agricultural products.

On Thursday, the international financial market experienced the biggest setback since the financial crisis. As pessimistic about the economic outlook caused panic sentiment, spread of risk aversion, the stock markets in Europe and the United States fell sharply, and crude oil and other commodity risk assets also suffered selling pressure. Investors are still more worried about the possibility that the US economy may be in a downturn. At the same time, European and American debt problems still plague the global market. The haze of the economic recession has seriously affected the expectations of commodity demand, and the commodity market has fallen into an unprecedented crisis. S&P has historically lowered the credit rating of U.S. debt, again exposing global financial markets to a bad blow. Whether the financial tsunami can turn into an economic crisis has left everyone with no end in heart.

However, the agricultural product market was at the forefront of other commodities, and it rebounded strongly after the opening on August 8th. The market showed a clear desire to stop falling. There are internal reasons for the performance of the rural labor force. On the one hand, global food demand is growing strongly and the global food supply is under tremendous pressure. The Horn of Africa has already experienced severe food shortages. The new round of food crisis may aggravate the pressure on global food prices. On the other hand, the increase in production costs and labor costs has increased the value range. The continuous slump has also caused speculative withdrawal of speculative funds, the bubble has been largely squeezed out, and the food market has once again shown its investment value. However, due to the growth of rigid demand, policy support, disaster weather and other potential bullish theme factors, the market downside space is constrained. Once the macro fundamentals improve, or the atmosphere of market transactions picks up, speculative funds may fear to come back again. Therefore, compared with industrial products, the resilience of agricultural products may be even stronger.

However, in the short term, the systematic risks of the financial market still exist, and the overall rebound of the agricultural product market is difficult to achieve overnight, and the risk of fluctuation is still relatively large. As far as the global economy is concerned, it has become a consensus to avoid the crisis as much as possible. After all, peace and development are still the theme of the current era. No one wants to see the impact of the economic recession on the world. Whether or not the crisis can be stopped eventually, but it is foreseeable to prevent the occurrence of the crisis, we cannot rule out a new round of bailout measures and once again inject vitality into the capital market. Based on the above considerations, the outlook for agricultural products remains cautiously optimistic.