Liu Yingjie, author of the Agricultural Products Team of Xinhu Futures Research Institute
On March 11, 2016, even the main contract of soybean oil 1609 contract surged 195,000 hands on a single day. Although there was no daily limit, this position change was rare in the history of soybean oil futures. In essence, there is no change in the fundamentals of soybean oil. Domestic inflation expectations are rising again, and soybean oil is still going to stocks. This is the mainstream explanation for attracting a large amount of OTC funds to enter the market to make more soybean oil. Agricultural products have always been the kind of funds speculation for inflation expectations. In the agricultural products, the destocking of domestic soybean oil is more thorough, the fundamentals are better, and it is in a state of long-term suppression. Soybean oil passively followed the palm oil rebound, beans - The brown price gap continues to shrink, which creates certain objective conditions for the rebound of soybean oil.
We believe that the changes in the macro situation provide an opportunity for the rise of the oil and fat market, but the changes in the supply and demand structure of oil itself are fundamental to the evolution of the market. In December 2015, we launched a strategy report on the on-site assessment of the top ten investment research teams of the Corporation. Gradually shifting to tight balance, the oil and fat market is close to the bottom, but there is no big upswing condition.†The main points based on our judgment include the objective growth of Indian consumption, the reduction of major oil palm oil and rapeseed oil, and the consumption of biodiesel. Not ideal, there are bright spots in the domestic soybean oil consumption. At that time, our views were more conservative. We didn't think that the oil market could get rid of the bottom consolidation stage immediately, and thought that this stage might last for another 1-3 months. In fact, within a month after the report was released, the oil market did not improve significantly. After the Spring Festival, the oil market showed signs of getting rid of the bottom. From a technical point of view, even the September price of soybean oil is currently close to the upper edge of the bottom consolidation period of 1 year and a half formed since August 2014. 6000 yuan/ton is an important barrier. At this critical node, we will reorganize the fundamentals of the global oil market and provide a reference for the next investment operation.
1. The destocking of the global oil and fat market is still going on.
To analyze the oil and fat market, we will first focus on the global market and draw a general direction from the perspective of the overall inventory of oils and fats. Global oil and fat inventories for 2015/16 were 16.46 million tons, down 2.72 million tons year-on-year. Among them, palm oil stocks fell the most, reaching 1.79 million tons, rapeseed oil stocks decreased by 500,000 tons, sunflower oil stocks decreased by 200,000 tons, and soybean oil stocks were basically the same as last year. In terms of inventory consumption ratio, the 2015/16 global oil and fat inventory consumption ratio was 9.29%, compared with 11.24% last year. The palm oil stocks consumption ratio was 10.71%, 14.42% last year, the rapeseed oil stocks consumption ratio was 14%, last year was 15.79%, the soybean oil stocks consumption ratio was 7.12%, and last year was 7.55%. The stock-to-consumption ratio of several major oil products is declining, and the decline in palm oil is particularly significant. In 2014/15, global oils began to enter the destocking stage, but the annual destocking was very limited. In 2015/16, with the negative impact of El Niño climate on palm oil production in Southeast Asia, India still maintains Strong import desires, the destocking rate of the global oil market has accelerated significantly. The current inventory reduction has created objective conditions for the formation of the bull market in the oil and fat market, but the realization of the bull market requires inventory to further reduce the expected cooperation.
Second, palm oil is the engine of this round of market launch
It is undeniable that the core drivers of the large-scale agricultural market are mostly related to the weather. The engine that started this round of oil and fat market is also the palm oil that has been reduced due to the El Niño climate. Although El Niño has been mentioned repeatedly for almost two years, its real effect is after October last year, October-February is exactly the seasonal reduction of palm oil, seasonal reduction of production of El Niño makes Malay palm oil Production has fallen more than expected, and it is currently expected that El Niño’s impact on production will continue into June this year. Subsequent changes to the La Nina climate pattern, resulting in a large amount of rainfall, may also lead to a sustained year-on-year decline in production. We expect global palm oil production to drop by 2 to 3 million tons this year.
At the same time, due to the sluggish crude oil market, Malay palm oil exports and domestic consumption are very bleak, which leads to Malay palm oil stocks still at a high level, but the current crude oil market's gains make the creatures The pressure on diesel producers has eased. In the second quarter of 2016, the Malay government will push for a firewood policy from B7 to B10 to boost the price of long-term palm oil. The Indonesian government is full of confidence in the implementation of the B20 fuel consumption target, but according to the current crude oil price calculation, Indonesia's 2016 firewood consumption is at most 2.04 million tons, far below the B20 target of the Indonesian government, which is 6.75 million tons. To achieve this goal, the narrowing of the price difference between crude palm oil and petrochemical diesel is needed. Moreover, from the current financial situation of the Indonesian government and the credit history of previous years, it is very difficult to achieve the B20 target. However, if the crude oil market continues to rebound, this goal is not impossible to achieve.
We expect Malay palm oil to produce between 1.3 million and 1.5 million tons per month in March-May. The monthly export volume is slightly lower than the output, between 1.2 and 1.35 million tons. It is expected that palm oil stocks will gradually decline in March-May. To 209, 201, 1.97 million tons. All in all, the destocking of Malay palm oil is still continuing, and palm oil is generally easy to rise and fall.
Third, CBOT soybean oil is still a pricing benchmark that cannot be ignored in the global oil market.
Although palm oil has become the world's largest oil producer, CBOT is still the pricing core of the global oil market. Soybean oil affected by CBOT soybeans has an important psychological impact on the global oil market. The global soybean market supply in 2015/16 is still relatively abundant. It is estimated that the 2015/16 Argentine soybean stocks will be 28.65 million tons, accounting for 36% of the global soybean stocks. Due to the perennial depreciation of the Argentine peso, Argentine farmers are accustomed to hoarding dollar-denominated soybeans. As a tool to hedge against inflation. Although the new Argentine government came to power and introduced some measures to stimulate soybean exports, the results were not satisfactory. Due to the poor liquidity of Argentina's huge soybean stocks, in fact, in most cases, it has little effect on the supply and demand situation of global soybeans. As can be seen from the following figure, the 2015/16 Global Soybean Bank is considered without considering Argentina. The ratio of sales has continued to rise. If it includes Argentina, it is a slight decline. In 2015/16, the US soybean production was 107 million tons, Brazil 100 million tons, and Argentina 58.5 million tons. The total output of the three countries was basically the same as last year. The supply of soybean oil is still abundant this year. The carry-over inventory is roughly the same as last year, but due to consumption. The increase has led to a slight decline in soybean oil store sales compared to the same period of last year.
Fourth, India's oil consumption is expected to continue to increase
In addition to biodiesel, the focus of global oil consumption this year is the rising oil consumption country (India). If the increase in biodiesel consumption is faced with many uncertainties including the implementation of the relevant national governments, then the growth potential of India's oil consumption is objective and relatively certain. India's own oilseed processing capacity is very weak, mainly relying on imported oil to maintain domestic demand, and its imports are extremely sensitive to price. We have learned a set of figures from the recent speech of the executive director of the Indian SEA Association of the Malay Palm Oil Conference, which basically confirms our judgment. It is expected that India's per capita oil consumption of 16 kg in 2015/16 will still maintain this annual growth rate of 3.5%. With a compound population growth, the demand for oil and fat consumption increased by 4.1% annually. India's domestic oilseed industry has stagnated, and oil import demand has increased year by year. The demand for oil imports in 2015/16 is expected to be 15.75 million tons, an increase of 1.49 million tons. Among them, there are 7.75 million tons of brown hair (7.72 million tons in 14/15), 2 million tons of refined palm (166), 4.2 million tons of soybean oil (299), 1.5 million tons of sunflower oil (154), and 300,000 tons of vegetable oil. ). The expected demand for soybean oil in the sub-data is significantly higher than the market expectation (around 3.6 million tons). Soybean oil increased significantly, mainly due to the current low bean browns and good soybean oil import profits. India's oil imports are affected by the price is very significant.
India's soybean oil imports from November to February were 1.57 million tons, a year-on-year increase of 890,000 tons; crude palm oil + refined palm oil imports were 2.92 million tons, an increase of 170,000 tons, and sunflower oil imports were 490,000 tons, a year-on-year decrease. 80,000 tons.
5. Domestic oils and oils face short-term dumping and huge amount of soybean import pressure
The supply-side reform of domestic agricultural products is being firmly implemented, which is not limited to the ongoing auction of ready-to-eat vegetable oil, but also the auction of future storage soybeans and reserve soybean oil. As of March 16, the storage oil has already sold 780,000 tons. In the past few weeks, the vegetable oil that has been sold has experienced a certain pressure of delivery. In addition, the quality of vegetable oil has been reduced through several weeks of auctions, which has led to a decline in the recent transaction rate. After the refining, the vegetable oil has a high cost performance and can replace the first-grade soybean oil. It has already been done by large oil companies. At the same time, it is estimated that the import of soybeans from March to June will reach 28.7 million tons, a year-on-year increase of 4.7 million tons. Domestic soybean oil stocks are likely to rebound inevitably, but the current inventory pressure is still mainly reflected in soybean meal. Some oil mills have a bulging phenomenon, and domestic soybean oil stocks are still at a low level of 650,000 tons. We have become accustomed to the expectation that Brazil's soybeans will arrive in Hong Kong in the past three to six months in recent years, but it is often expected to be sufficient. In fact, the pressure is not obvious or even backward, so it is expected for huge soybean imports. Don't worry too much. What we need to pay more attention to is the change in the structure of the price difference between oils and fats caused by the reform of the supply side of agricultural products.
Conclusion
At present, among the three major oil varieties in China, the weakest is vegetable oil, followed by soybean oil, and the strongest is palm oil. The weakest vegetable oil is naturally due to the continued selling of the vegetable oil. The palm oil is the strongest because of the reduction caused by El Niño. Expected and the consumption of biodiesel is expected to increase this year. Only soybean oil has basically no story so far. Therefore, the price difference between vegetable and soybean oil and the difference between soybean and palm oil have been reduced to the low level in the same period of the previous year. At present, it is at the bottom shock stage. The short-selling-soybean oil spread and the profit margin of the bean-brown oil spread may be limited. Let us imagine what unexpected stories may occur in future soybean oil.
All in all, the three major domestic oils and fats are mutually restrained, and the short-term trend is difficult to say clearly. However, from the medium to long-term perspective, we believe that the oil market is emerging from the bottom shock range and gradually forming a rising pattern. The reasons are mainly based on the above mentioned points: The global oil and fats market continues to destock, palm oil is still looking at the supply and demand side, there is still a story, India's oil consumption growth is considerable. The risk sources for long-term oil and fat include: China's agricultural product supply side reform will have a big impact on the market in the short term, but it will be good for the whole industry in the long run; the Indonesian government's financial situation and the credit history of previous years are not good, leading to future biodiesel The output is quite variable; the recent international macroeconomic outlook is short-lived, and crude oil has once again rebounded and then fell again.
On March 11, 2016, even the main contract of soybean oil 1609 contract surged 195,000 hands on a single day. Although there was no daily limit, this position change was rare in the history of soybean oil futures. In essence, there is no change in the fundamentals of soybean oil. Domestic inflation expectations are rising again, and soybean oil is still going to stocks. This is the mainstream explanation for attracting a large amount of OTC funds to enter the market to make more soybean oil. Agricultural products have always been the kind of funds speculation for inflation expectations. In the agricultural products, the destocking of domestic soybean oil is more thorough, the fundamentals are better, and it is in a state of long-term suppression. Soybean oil passively followed the palm oil rebound, beans - The brown price gap continues to shrink, which creates certain objective conditions for the rebound of soybean oil.
We believe that the changes in the macro situation provide an opportunity for the rise of the oil and fat market, but the changes in the supply and demand structure of oil itself are fundamental to the evolution of the market. In December 2015, we launched a strategy report on the on-site assessment of the top ten investment research teams of the Corporation. Gradually shifting to tight balance, the oil and fat market is close to the bottom, but there is no big upswing condition.†The main points based on our judgment include the objective growth of Indian consumption, the reduction of major oil palm oil and rapeseed oil, and the consumption of biodiesel. Not ideal, there are bright spots in the domestic soybean oil consumption. At that time, our views were more conservative. We didn't think that the oil market could get rid of the bottom consolidation stage immediately, and thought that this stage might last for another 1-3 months. In fact, within a month after the report was released, the oil market did not improve significantly. After the Spring Festival, the oil market showed signs of getting rid of the bottom. From a technical point of view, even the September price of soybean oil is currently close to the upper edge of the bottom consolidation period of 1 year and a half formed since August 2014. 6000 yuan/ton is an important barrier. At this critical node, we will reorganize the fundamentals of the global oil market and provide a reference for the next investment operation.
1. The destocking of the global oil and fat market is still going on.
To analyze the oil and fat market, we will first focus on the global market and draw a general direction from the perspective of the overall inventory of oils and fats. Global oil and fat inventories for 2015/16 were 16.46 million tons, down 2.72 million tons year-on-year. Among them, palm oil stocks fell the most, reaching 1.79 million tons, rapeseed oil stocks decreased by 500,000 tons, sunflower oil stocks decreased by 200,000 tons, and soybean oil stocks were basically the same as last year. In terms of inventory consumption ratio, the 2015/16 global oil and fat inventory consumption ratio was 9.29%, compared with 11.24% last year. The palm oil stocks consumption ratio was 10.71%, 14.42% last year, the rapeseed oil stocks consumption ratio was 14%, last year was 15.79%, the soybean oil stocks consumption ratio was 7.12%, and last year was 7.55%. The stock-to-consumption ratio of several major oil products is declining, and the decline in palm oil is particularly significant. In 2014/15, global oils began to enter the destocking stage, but the annual destocking was very limited. In 2015/16, with the negative impact of El Niño climate on palm oil production in Southeast Asia, India still maintains Strong import desires, the destocking rate of the global oil market has accelerated significantly. The current inventory reduction has created objective conditions for the formation of the bull market in the oil and fat market, but the realization of the bull market requires inventory to further reduce the expected cooperation.
Second, palm oil is the engine of this round of market launch
It is undeniable that the core drivers of the large-scale agricultural market are mostly related to the weather. The engine that started this round of oil and fat market is also the palm oil that has been reduced due to the El Niño climate. Although El Niño has been mentioned repeatedly for almost two years, its real effect is after October last year, October-February is exactly the seasonal reduction of palm oil, seasonal reduction of production of El Niño makes Malay palm oil Production has fallen more than expected, and it is currently expected that El Niño’s impact on production will continue into June this year. Subsequent changes to the La Nina climate pattern, resulting in a large amount of rainfall, may also lead to a sustained year-on-year decline in production. We expect global palm oil production to drop by 2 to 3 million tons this year.
At the same time, due to the sluggish crude oil market, Malay palm oil exports and domestic consumption are very bleak, which leads to Malay palm oil stocks still at a high level, but the current crude oil market's gains make the creatures The pressure on diesel producers has eased. In the second quarter of 2016, the Malay government will push for a firewood policy from B7 to B10 to boost the price of long-term palm oil. The Indonesian government is full of confidence in the implementation of the B20 fuel consumption target, but according to the current crude oil price calculation, Indonesia's 2016 firewood consumption is at most 2.04 million tons, far below the B20 target of the Indonesian government, which is 6.75 million tons. To achieve this goal, the narrowing of the price difference between crude palm oil and petrochemical diesel is needed. Moreover, from the current financial situation of the Indonesian government and the credit history of previous years, it is very difficult to achieve the B20 target. However, if the crude oil market continues to rebound, this goal is not impossible to achieve.
We expect Malay palm oil to produce between 1.3 million and 1.5 million tons per month in March-May. The monthly export volume is slightly lower than the output, between 1.2 and 1.35 million tons. It is expected that palm oil stocks will gradually decline in March-May. To 209, 201, 1.97 million tons. All in all, the destocking of Malay palm oil is still continuing, and palm oil is generally easy to rise and fall.
Third, CBOT soybean oil is still a pricing benchmark that cannot be ignored in the global oil market.
Although palm oil has become the world's largest oil producer, CBOT is still the pricing core of the global oil market. Soybean oil affected by CBOT soybeans has an important psychological impact on the global oil market. The global soybean market supply in 2015/16 is still relatively abundant. It is estimated that the 2015/16 Argentine soybean stocks will be 28.65 million tons, accounting for 36% of the global soybean stocks. Due to the perennial depreciation of the Argentine peso, Argentine farmers are accustomed to hoarding dollar-denominated soybeans. As a tool to hedge against inflation. Although the new Argentine government came to power and introduced some measures to stimulate soybean exports, the results were not satisfactory. Due to the poor liquidity of Argentina's huge soybean stocks, in fact, in most cases, it has little effect on the supply and demand situation of global soybeans. As can be seen from the following figure, the 2015/16 Global Soybean Bank is considered without considering Argentina. The ratio of sales has continued to rise. If it includes Argentina, it is a slight decline. In 2015/16, the US soybean production was 107 million tons, Brazil 100 million tons, and Argentina 58.5 million tons. The total output of the three countries was basically the same as last year. The supply of soybean oil is still abundant this year. The carry-over inventory is roughly the same as last year, but due to consumption. The increase has led to a slight decline in soybean oil store sales compared to the same period of last year.
Fourth, India's oil consumption is expected to continue to increase
In addition to biodiesel, the focus of global oil consumption this year is the rising oil consumption country (India). If the increase in biodiesel consumption is faced with many uncertainties including the implementation of the relevant national governments, then the growth potential of India's oil consumption is objective and relatively certain. India's own oilseed processing capacity is very weak, mainly relying on imported oil to maintain domestic demand, and its imports are extremely sensitive to price. We have learned a set of figures from the recent speech of the executive director of the Indian SEA Association of the Malay Palm Oil Conference, which basically confirms our judgment. It is expected that India's per capita oil consumption of 16 kg in 2015/16 will still maintain this annual growth rate of 3.5%. With a compound population growth, the demand for oil and fat consumption increased by 4.1% annually. India's domestic oilseed industry has stagnated, and oil import demand has increased year by year. The demand for oil imports in 2015/16 is expected to be 15.75 million tons, an increase of 1.49 million tons. Among them, there are 7.75 million tons of brown hair (7.72 million tons in 14/15), 2 million tons of refined palm (166), 4.2 million tons of soybean oil (299), 1.5 million tons of sunflower oil (154), and 300,000 tons of vegetable oil. ). The expected demand for soybean oil in the sub-data is significantly higher than the market expectation (around 3.6 million tons). Soybean oil increased significantly, mainly due to the current low bean browns and good soybean oil import profits. India's oil imports are affected by the price is very significant.
India's soybean oil imports from November to February were 1.57 million tons, a year-on-year increase of 890,000 tons; crude palm oil + refined palm oil imports were 2.92 million tons, an increase of 170,000 tons, and sunflower oil imports were 490,000 tons, a year-on-year decrease. 80,000 tons.
5. Domestic oils and oils face short-term dumping and huge amount of soybean import pressure
The supply-side reform of domestic agricultural products is being firmly implemented, which is not limited to the ongoing auction of ready-to-eat vegetable oil, but also the auction of future storage soybeans and reserve soybean oil. As of March 16, the storage oil has already sold 780,000 tons. In the past few weeks, the vegetable oil that has been sold has experienced a certain pressure of delivery. In addition, the quality of vegetable oil has been reduced through several weeks of auctions, which has led to a decline in the recent transaction rate. After the refining, the vegetable oil has a high cost performance and can replace the first-grade soybean oil. It has already been done by large oil companies. At the same time, it is estimated that the import of soybeans from March to June will reach 28.7 million tons, a year-on-year increase of 4.7 million tons. Domestic soybean oil stocks are likely to rebound inevitably, but the current inventory pressure is still mainly reflected in soybean meal. Some oil mills have a bulging phenomenon, and domestic soybean oil stocks are still at a low level of 650,000 tons. We have become accustomed to the expectation that Brazil's soybeans will arrive in Hong Kong in the past three to six months in recent years, but it is often expected to be sufficient. In fact, the pressure is not obvious or even backward, so it is expected for huge soybean imports. Don't worry too much. What we need to pay more attention to is the change in the structure of the price difference between oils and fats caused by the reform of the supply side of agricultural products.
Conclusion
At present, among the three major oil varieties in China, the weakest is vegetable oil, followed by soybean oil, and the strongest is palm oil. The weakest vegetable oil is naturally due to the continued selling of the vegetable oil. The palm oil is the strongest because of the reduction caused by El Niño. Expected and the consumption of biodiesel is expected to increase this year. Only soybean oil has basically no story so far. Therefore, the price difference between vegetable and soybean oil and the difference between soybean and palm oil have been reduced to the low level in the same period of the previous year. At present, it is at the bottom shock stage. The short-selling-soybean oil spread and the profit margin of the bean-brown oil spread may be limited. Let us imagine what unexpected stories may occur in future soybean oil.
All in all, the three major domestic oils and fats are mutually restrained, and the short-term trend is difficult to say clearly. However, from the medium to long-term perspective, we believe that the oil market is emerging from the bottom shock range and gradually forming a rising pattern. The reasons are mainly based on the above mentioned points: The global oil and fats market continues to destock, palm oil is still looking at the supply and demand side, there is still a story, India's oil consumption growth is considerable. The risk sources for long-term oil and fat include: China's agricultural product supply side reform will have a big impact on the market in the short term, but it will be good for the whole industry in the long run; the Indonesian government's financial situation and the credit history of previous years are not good, leading to future biodiesel The output is quite variable; the recent international macroeconomic outlook is short-lived, and crude oil has once again rebounded and then fell again.
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