The pulp cost supports the strong demand for live pigs and the expectation of end storage recovery

Source: Xinhu Futures Author: Xinhu Futures

Text of research report

【 pulp 】

In February 2024, the global wood pulp shipping volume grew at 3.91% month on month and 12.85% year on year. In April 2024, the month on month growth rate of China's wood pulp imports was 1.58%, and the year-on-year growth rate was 8.70%.

In the past week, the price of household paper, double gummed paper and double copper paper remained unchanged. In terms of downstream construction, living paper, double gummed paper and coated paper started to rise. The total stock of wood pulp in Qingdao, Changshu, Gaolan, Tianjin and other port areas declined. There are many production stoppages and strikes in the international market, with high geopolitical risks and stronger pulp cost support.

【 Soybean meal 】

The overnight US bean closed at 1246.75 in July, up 1.53%. The market continued to be boosted by concerns about crop losses in Rio Grande do Sul, Brazil. Excessive rainfall and severe floods continue to restrict the cargo transportation of Rio Grande do Sul, the fourth largest port in Brazil soybean Export port and the third largest fertilizer import port.

The weekly report on crop progress released by the US Department of Agriculture after the session showed that as of May 19, the US soybean planting had been completed by 52%, compared with 35% a week ago, 61% a year earlier and 49% on average in five years. This figure is higher than the 49% predicted by analysts.  

According to Chinese customs data, in the first four months of this year, China imported 40% less soybeans from the United States than the same period last year, and bought more soybeans from Brazil. We think that the output elasticity of Brazil is still a little big in the future, because the specific output loss will not be seen for a while. In addition, the May report of US Agriculture seems to have little information about Brazil's output, which is only reduced by 1 million tons.

This shows that the expectation gap between different subjects in the United States and Brazil always exists, which is a hidden danger and a point of repeated speculation. When soybean meal futures are in full swing, domestic soybean meal spot has always been weak, and the feedback from spot has always been poor, especially the base difference in recent months has always been low. Now soybean meal has entered a seasonal stock increase cycle.

But the good news is that from the absolute position of the basis, the downlink space of the basis has been blocked. If the empty basis is always empty, the funds for multi basis will increase. If the future growth of US soybean can match the growth of domestic soybean meal basis, the upward momentum cannot be underestimated.

In terms of operation, we always say that Meidou is at a low position below 1200, and now it is hovering above 1200, but it is still far from the extreme. Be cautious in holding more than one meal.

【 Pig 】

The pig market has become stronger again. As time goes on, the effect of pig capacity reduction in the early stage is expected to gradually reflect, and the demand side is expected to recover. In the fourth quarter of this year, the supply pressure is expected to decline while the demand season is peak. The long-term price trend is relatively optimistic. In the near future, the feed raw material side Corn The trend of soybean meal and soybean meal was strong, and the cost side also supported the rebound of pigs.

From the perspective of piglet birth, in March, the number of piglets became regular month on month, which was lower than that of the same period last year, but much higher than that of the same period in 2022, limiting the high expectations of contract pig prices in recent months, and the supply should not be too optimistic in recent months. If February is active in May, we can focus on the empty contract opportunity of 07 at every height. If February is in general mood, It is not recommended to empty the 07 contract. In 2024, the overall price focus of pigs is expected to move up year on year. The 11 contract will continue to focus on multiple opportunities in the callback stage. In addition, it is suggested to continue the reverse operation in coordination with the entrance rhythm of the second breed and seasonal consumption in low and peak seasons.

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