Summary:
Since late September Soybean meal The sharp rise in prices is transmitted to feed products. In late October, several feed enterprises issued a notice to raise the price of feed products.
The terminal aquaculture industry will generally be notified before the rise of feed prices, so before the rise of feed prices, the market will have a wave of stock boom, which is specifically reflected in the 5.93 million tons of soybean meal picked up in the first four weeks of October, an increase of 380000 tons or+6.8% year on year, which is far higher than the level of the same cumulative pick up from January to September.
The China Feed Industry Association issued a notice that, together with large feed enterprises and large breeding enterprises, it has formulated two group standards, namely, Formula Feed for Piglets, Growing and Finishing Pigs and Formula Feed for Laying Hens and Broilers, which will be implemented from November 1, 2018.
In the long run, the use of low protein diet feed technical standards will probably reduce the annual consumption of soybean meal by about 425-675 million tons in the future. It can reduce China's import to a certain extent soybean Dependency of.
The future development of Sino US economic and trade relations will directly affect China's soybean import supply before April 2019. In the domestic soybean meal market before the Spring Festival in 2019, the price will fluctuate greatly, so it is recommended to be cautious.
The forward soybean meal basis quotation from April to May 2019 is very risky, so it is recommended that enterprises that need soybean meal purchase cautiously.
1、 Event:
Recent important industrial events: 1. Sino US economic and trade relations continue, and the future is full of suspense. 2. The technical standard of low protein diet will be implemented on November 1, 2018. 3. Influenced by the rising price of raw materials, feed enterprises have intensively raised product prices.
2、 Drivers and future development
In October, Sino US economic and trade relations still showed no signs of easing. The soybean meal supplier (oil factory) has almost no purchase transactions of imported American soybeans in recent months. With the increase of import costs, the supply concern has pushed the oil factory to adopt the strategy of price holding, and the spot price of soybean meal has been rising by virtue of the Dongfeng double stocking, which also brings the soybean meal futures price to continue to rise. Therefore, due to the rising cost of raw materials, feed enterprises have recently intensively issued product price increases.
Figure 1: Soybean meal futures and spot prices (yuan/ton)
Source: Wind, Shenwan Futures Research Institute
Soybean meal picking has increased in recent four weeks, oil plants are actively pressing, and soybean meal inventory is temporarily stable
From January to September this year, the oil factory shipped 52.01 million tons of soybean meal, compared with 52.13 million tons in the same period last year, almost unchanged. The soybean meal shipment in September was 6.7 million tons, compared with 6.68 million tons in the same period last year, almost the same. In October, 5.93 million tons of soybean meal were shipped in the first four weeks, 5.55 million tons in the same period last year, an increase of 380000 tons or 6.8% year on year. The demand performance after the National Day holiday was significantly better than that in the first nine months of this year. Due to sufficient raw materials and considerable profits, the oil plant also achieved the highest level of crushing volume in history in the fourth week of October.
In November, due to the implementation of the low protein diet formula, on the one hand, reducing the proportion of protein raw materials can reduce the feed cost, on the other hand, it can reduce the overall demand for domestic soybean meal. Therefore, in the future, we should pay attention to the year-on-year change of soybean meal demand after November.
Figure 2: Weekly delivery volume of soybean meal in oil factory (10000 tons)
Source: Tianxia Granary, Shenwan Futures Research Institute
Pay attention to the progress of Sino US economic and trade relations, and focus on the purchase of US beans
The future development of Sino US economic and trade relations will directly affect China's soybean import supply before April 2019. If the tension continues, the fundamentals of China will become increasingly scarce before a large number of new works from South America are supplied to China. If economic and trade relations ease and the policy of imposing tariffs on each other changes, China will quickly purchase and import at least 10 million tons of soybeans from the United States. This requires attention to the report on the export sales of American soybeans.
Table 1: US soybean export sales volume (10000 tons)
Source: USDA, Shenwan Futures Research Institute
USDA sales report shows. As of October 18, the U.S. soybean export sales to China in 2018-2019 were 1.09 million tons, 12.86 million tons in the same period last year, a year-on-year decrease of 11.77 million tons or 92%. The shipment of soybeans to China was only 200000 tons, down 96% year on year. In this year, the sales volume of soybeans from the United States to other countries in the world was 15.29 million tons, an increase of 6.13 million tons or 67% year on year. The flow of international soybean import and export trade shows that China purchases more soybeans from non American countries, while other demand countries purchase more soybeans from the United States.
According to the current soybean procurement situation of oil plants, China's soybean import volume in November January is expected to be 17.1 million tons, 26.71 million tons in the same period last year, which will decrease by 9.6 million tons or about 36% year on year. Before the harvest of new crops in South America is supplied to China, China still needs to purchase long-term soybeans. It is necessary to pay attention to the profit level of oil plants and the information of soybean purchase transactions.
Figure 3: Estimated Arrival of Soybean Imports (10000 tons)
Source: Tianxia Granary, Shenwan Futures Research Institute
The technical standard of low protein diet was released and implemented, focusing on the change of demand in November
On October 23, 2018, China Feed Industry Association issued two group standards, namely, Formula Feed for Piglets, Growing and Fattening Pigs and Formula Feed for Laying Hens and Broilers, which will be implemented from November 1, 2018. Many feed breeding enterprises promise to actively participate in the evaluation and research and analysis of the implementation effect of the standard, and jointly promote the sustainable and healthy development of the industry.
In general, this adjustment has lowered the lower limit of the proportion of crude protein in feed, and added the upper limit, which was not stipulated before. According to the estimation of the Ministry of Agriculture and Rural Affairs, the average protein level of pig formula feed was reduced by 1.5 percentage points; The protein in the formula feed for laying hens and broilers decreased by about 1%. We estimate that the consumption of soybean meal can be reduced by 4.25-675 million tons, equivalent to 5.31-8.43 million tons of soybean.
The final impact of the implementation of low protein diet technology on soybean meal demand needs to pay attention to the performance of soybean meal demand in November.
Figure 4: Dongguan soybean meal basis (for soybean meal futures in May)
Source: Tianxia Granary, Shenwan Futures Research Institute
The long-term sales basis of soybean meal of the oil factory is high, so it is recommended that enterprises demanding soybean meal purchase cautiously
At present, the oil factory has a sales basis of M1905+200 for April May 2019.
At present, Brazil is sowing faster than the same period of previous years. Exporters said that they might ship 3 million tons of soybeans in January 2019, compared with 1.82 million tons shipped in the same period of last year (due to the high inventory last year). The market's estimate of shipment in Brazil in February also increased. The shipment volume in Brazil in February last year was 5.5 million tons, and this year's estimate was more than 7 million tons. After that, Brazil began to supply the international market in large quantities. From April to May next year, there will be no doubt that a large number of Brazilian newly planted soybeans will be supplied to China. By then, the domestic supply level in April to May will significantly ease the tension in the early stage.
In April, the basis of M1905 futures price and market spot price will tend to return to near zero. Referring to the market basis level over the years, the basis of M1905+200 is too high, which has great potential risks. The basis risk of M1905+200 in May is greater.
Summary and outlook
According to the above analysis, affected by the rise in the price of soybean meal raw materials in the past month and the increase in product prices of feed enterprises, downstream companies actively pick up goods from oil plants. However, since November 1, the low protein diet standard has been implemented, and the oil factory shipment needs to be paid attention to later. The Sino US economic and trade relations still show no signs of easing. Before the Spring Festival, the domestic soybean import supply is expected to continue to decline significantly year on year. At present, oil refineries still maintain high prices. The domestic soybean meal market before the Spring Festival is greatly affected by the trend of Sino US economic and trade relations, which is prone to rise and fall sharply. For the long-term basis after the Spring Festival, the price quoted by the oil factory is on the high side and there are risks.
3、 Risk warning
1. The future development of Sino US economic and trade relations, whether China starts to import American soybeans, is still the most important factor in the price fluctuation of soybean meal. In addition, changes in soybean entrepot trade and miscellaneous meal imports will also affect domestic supply and demand in the next three months.
2. The technical standard of low protein diet was issued and implemented, and the proportion of soybean meal added in feed could be reduced by about 1.5%, which will have an important impact on the supply and demand relationship of soybean meal in the medium and long term.
3. The weather conditions during the planting period of South American soybeans and the export transportation logistics after harvest should be paid attention to in January and February, which will have a great impact on the domestic basis after the Spring Festival.
Shenyin Wanguo Futures Team 1
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Editor in charge: Song Peng
