Policy Overview
Go long Soybean meal , put option contracts M1901-P-3100 and M1901-P-3150. The target price is 3300-3400. Stop loss price is 3100.
factor analysis
1. At present, there is no substantial progress in the negotiations. Considering that the previous Sino US trade negotiations have been repeated, it is expected that the probability of complete reconciliation of Sino US trade in the short term is small. There is still a gap in the probability of protein meal in the first quarter of next year, and the long-term soybean meal price focus is still expected to move up in shock.
2. At present, African swine fever has less impact on the pig stock, but more impact on the confidence of the breeding industry. In addition, in the short term, the pig stock is severely suppressed, which has limited impact on the demand for soybean meal.
Risk Management
Risk factors:
1. In the short term, the Sino US trade issue is completely reconciled, or China imports a large number of American beans, which is bad for domestic soybean meal.
2. The spread of swine plague in Africa has accelerated in a short period of time, seriously curbing domestic demand for soybean meal.
Risk control means: if the soybean meal 1901 contract falls to the previous low of 3100, stop loss and exit.
1、 Market review
Internationally, the main force of US soybeans fluctuated widely between 840-900 cents per bushel in October, with an inverted "V" trend. The main reason is that the heavy rainfall in the midwest production areas of American beans in the early stage led to the delay or interruption of harvest, and the favorable weather supported the fluctuation of American beans up to the highest level in the month. However, due to the unchanged expectation of the high yield of new US soybeans, and the sharp decline in export sales due to the impact of Sino US trade friction, US soybeans fell under pressure and shocks, and finally closed up - 0.82% in October. As of the end of October, the fund soybean On the contract, the fund increased its long position by -19666 hands, short position by 13010 hands, and net position by 64215 hands. From the perspective of position structure, the fund has a strong desire to increase its short position on the soybean contract.
Domestically, Liandou and Lianmei in October mainly showed a trend of shock and correction. Due to the continuous tension in Sino US trade relations, the tight domestic soybean meal supply in the fourth quarter and the first quarter of next year is expected to increase, and the beans in the opening session after the festival rose to a recent high. However, in October, the government continuously introduced measures to narrow the domestic supply gap of protein meal, including liberalizing the import restrictions on Indian rapeseed meal, canceling the tax rebate for soybean meal export, and reducing the proportion of protein in pig and chicken feed. At the same time, African swine fever in China is currently in the stage of concentrated outbreak, and the epidemic has obvious signs of spread nationwide, which has hit the confidence of the breeding industry greatly, and the enthusiasm for picking up goods in the downstream has decreased, or it has seriously affected the demand for pig stocks and soybean meal in the later period. Due to many short-term negative factors, the soybean meal has entered the shock callback stage since the middle of October, and the main force of soybean meal in October closed up -1.78%.
Figure 1 Trend of main contracts
Data source: Wind, Guodu Futures Research Institute
Figure 2 Weekly Non commercial Position Data of American Bean CFTC
Data source: Wind, Guodu Futures Research Institute
Figure 3 Main Trading Volume and Position of Liandou
Data source: Wind, Guodu Futures Research Institute
Figure 4 Trading volume and position of main continuous meal
Data source: Wind, Guodu Futures Research Institute
2、 Fundamental analysis
In terms of supply, it may maintain tight expectations. According to the General Administration of Customs, China imported 8.01 million tons of soybeans in September, down 1.23% from the same period last year. From January to September, soybeans imports fell 2% to 70.01 million tons year-on-year. At present, the export of South American soybeans has come to an end. Due to the Sino US trade war, China's purchase of new American soybeans has significantly decreased. Tianxia Granary estimates that the actual arrival of China's imported soybeans in October will be 6.399 million tons, and the arrival in November, December and January next year will be significantly reduced to only 6.1 million tons, 6 million tons and 5 million tons. Due to the shutdown for maintenance at the end of the month and the high soybean meal inventory at present, the operating rate of oil plants declined last week. In the 44th week, the operating rate of domestic oil plants was 53.25%, down 4.29% from the previous week, and the crushing volume was 1.8651 million tons, down 7.45% from the previous week. Due to the slow shipment of soybean meal by some oil plants, the crushing volume is expected to continue to decline this week. Due to the concentration of soybeans in Hong Kong in the early stage, the domestic soybean and soybean meal inventory is still at a high level in the same period of history. In the short term, the domestic soybean supply is relatively loose. However, if the Sino US trade is not reconciled or China continues not to import American soybeans, the soybean supply will gradually become tight, and it is expected that the fourth quarter will enter the stage of accelerated destocking.
In terms of demand, there are many negative factors. At present, there are two main factors restraining the demand for soybean meal. First, due to the poor profits of pig breeding, China's pig stock has continued to decline since the end of 2016. In addition, there have been more than 50 cases of African pig plague in China since the beginning of August. Although the current impact of pig plague is limited, it has a great impact on the confidence of the breeding industry, or seriously affected the pig stock in the later period. Second, the government has constantly introduced measures to reduce the gap of protein meal in the fourth quarter and the first quarter of next year. It mainly includes opening the restrictions on the import of Indian rapeseed meal, canceling the tax rebate on the export of Chinese soybean meal, and the China Feed Industry Association approved the release of the group standard for low protein compound feed for pigs and chickens. It is estimated that after the new standard is fully implemented in the whole industry, the annual consumption of soybean meal in the breeding industry is expected to reduce by about 11 million tons, driving the reduction of soybean demand by about 14 million tons, It is conducive to easing the pressure of soybean arrival reduction in the fourth quarter and the first quarter of next year.
Figure 5 Domestic Soybean Inventory
Data source: Wind, Guodu Futures Research Institute
Figure 6 Domestic Soybean Meal Inventory
Data source: Wind, Guodu Futures Research Institute
Figure 7 Pig breeding profit
Data source: Wind, Guodu Futures Research Institute
Figure 8 Pig Inventory and Pig Grain Price Comparison
Data source: Wind, Guodu Futures Research Institute
Figure 9 Cost price of imported soybeans at port
Data source: Wind, Guodu Futures Research Institute
Figure 10 Crushing profit of imported soybean oil plant
Data source: Wind, Guodu Futures Research Institute
Figure 11 Soybean meal cost when the crushing profit of imported soybeans is zero
Data source: Wind, Guodu Futures Research Institute
Figure 12 Exchange Rate of USD to RMB and Real
Data source: Wind, Guodu Futures Research Institute
3、 Future prospects
On November 1, Trump tweeted that the heads of state of China and the United States had had a very good and very long exchange. The meeting scheduled during the G20 Summit was expected to make good progress. The impact of the trade war is expected to ease, and domestic beans have fallen sharply since November. However, there is no substantial progress in the current negotiations. Considering that the previous Sino US trade negotiations have been repeated, it is expected that the probability of a complete reconciliation of Sino US trade is small in the short term, and there is still a gap in the probability of protein meal in the first quarter of next year. The long-term price focus of soybean meal is still expected to move up in shock, while the short-term negative is exhausted. It is expected that soybean meal is easy to rise but difficult to fall, so it is recommended to go long on the low side.
Guodu Futures and Options Team
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Editor in charge: Song Peng
