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Tao Jinfeng of Donghua Futures
Recently, although the per unit area yield and output of Brazil's soybeans are expected to be lower than expected, the current pressure of domestic and international avian influenza epidemic has not substantially improved. The recovery of livestock subsidies is slow, the consumption of soybean meal is sluggish, and the spot price has also weakened all the way. It is really not easy for soybean futures to rebound.
First of all, Brazil's soybean production reduction is difficult to change the current pattern of soybean weakness. Asian soybean rust in some regions of Brazil and insufficient rainfall in central and southern regions have caused more damage to soybean crops than expected. The Brazilian Ministry of Agriculture estimated that Brazil's soybean production in 2004/2005 might be only 51.2 million tons, far lower than its initial forecast of 59 million tons. At the same time, the prospect of Argentine soybean production has worsened, and the per unit area yield in most regions will be far lower than last year's level. Due to the low price of soybeans, the income of soybean farmers has decreased, and the trend of Brazilian currency real against the U.S. dollar is strong, which will reduce the soybean planting area in Brazil by 1 million hectares in 2006/2007, which is the second consecutive year of decline in soybean planting area in Brazil. The reduction of soybean production and the decrease of planting area in Brazil are more beneficial to the future. However, the main factors affecting the soybean market at present are the weak consumption growth and the lack of confidence in consumption expectations. The current global spread of avian influenza is one of the main negative factors.
Secondly, the soybean supply and demand fundamentals are still empty. As the cost of soybean production is lower than that of corn, American farmers will plant more soybeans and reduce the area of corn this year. The relevant agencies predict that the average soybean planting area in the United States will reach 74.05 million acres in 2006, more than 74.12 million acres in 2005.
Third, avian influenza The epidemic situation is repeated, and the prevention and control situation is still grim. Zhu Xiuyan, chief economist of the Ministry of Agriculture, said that at present, the situation of bird flu in China is still quite serious, and the task of prevention and control is still arduous. The situation of bird flu this spring is really not optimistic. In fact, the recent international outbreaks of highly pathogenic avian influenza are still one after another. At present, the poultry breeding industry is in a wait-and-see mood. Because most farmers are still in a loss situation, and the current pig breeding efficiency is also poor, the enthusiasm for livestock supplement is generally low, and the demand for soybean meal feed is still weak. Although nearly half of the domestic pressing plants have stopped production at present, they hope to support the price of soybean meal and soybean oil by reducing the supply to the market. Recently, the spot price of soybean oil has been relatively stable, while the spot price of soybean meal has also risen. However, feed enterprises are still not enthusiastic about purchasing soybean meal, and the rise of spot price of soybean meal lacks follow-up power.
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