Analysis and prediction: the two ends of soybean and the pattern of commodity changes

Analysis and prediction: the two ends of soybean and the pattern of commodity changes
2015-12-02 10:00 Source: Hexun Futures

although contact with this variety of soybeans for many years, because they are not people in this industry, their pulse is not clear enough.

Oak Valley researcher Liang Zhimo from the macro-mainly the dollar, supply and demand, planting, inventory and price relationship, made a mathematical model for quantitative research, the conclusion, to give a long-term operating plan, but in the short trend, still have to rely on short-term supply and demand pressure and sentiment to calculate the trading method.

Soybean meal is a variety that the author has tried and failed repeatedly. In fact, this year, the oil-to-meal ratio, brown oil ratio, and rapeseed meal-to-soybean meal ratio showed correlation beyond the scope of large-cycle changes and cost support. You can see that soybean meal can go to 2600-2700 when the U.S. bean 850 is near, and soybean meal falls below 2500 when the U.S. bean rebounds to 900. This pattern reflects the pressure of complex arbitrage hedging relationships on the soybean meal variety.

Although agricultural products look at supply, demand is still the direction we must look. When the pig cycle and poultry, aquatic products and so on are carefully studied, the superficial glancing and glancing research has been unable to tell the truth.

For example, pig stock. After a four-to five-year pig cycle, pork prices have been rising in the last year, but they have failed to promote a large-scale increase in the stock of breeding sows and pigs. Substitute products are constantly eroding the feed industry's soybean meal protein territory.

So what happened?

The underlying reason for having to be investigated is that the overall financing and expansion capacity of the pig industry has been weakened as a whole in the past pig cycle. And during the depressed phase of the macro cycle, wide money did not reach new investment in the pig industry.

This brings a serious problem. In fact, the price of pork will continue to rise, but the range will not be too large. The microscopic performance of the pig stock column is that the weight of the column becomes larger, and the overall reduction in the cost of feed can allow farmers to put the pig longer and heavier again.

This is a description of the Austrian school's economic cycle, when massive monetary stimulus passed, large investments were made in construction equipment with excess capacity, price collapses and capital chains were broken, and food shortages were found, but no money was injected into the investment.

As a result, the recovery phase of the pig cycle is also lengthened, which will give surviving farmers a longer period of profitability, thus allowing them to accumulate capital and also credit, allowing fearful banks to have the confidence and collateral to inject capital into the pig industry, thus increasing the number of pigs on hand.

On the supply side, there was a two-year El Nino phenomenon, which brought about good weather and the expansion of soybean planting area in North and South America until the soybean price was close to the cost price of 850 cents.

The author has always been skeptical about the process of de-capacity of commodities, because the author participated in the commodity industry did not go through a complete cycle, do not know whether de-capacity is an active process.

For example, the non-ferrous industry began to alliance, demanding a joint production cut, and let the state storage. But what about the rubber industry? Natural rubber is a loose industry dominated by small rubber farmers around the world. De-capacity will quickly happen to the big rubber farmers, the manor owners, because they hire workers to harvest has fallen into the red. A large number of small rubber farmers will not stop. There will be regional natural competition, and areas with high living costs will trigger rubber farmers to abandon cutting and replace varieties, resulting in a decline in the industry's capacity. In fact, sugarcane-like white sugar has already appeared in this pattern, and the removal of production capacity is at the expense of China's reduced acreage. The rubber industry will also be eliminated by low-cost emerging producers in Southeast Asia and Africa with China's planting and harvesting area, unless China adopts large-scale subsidies.

There will be different industries, that is to say, it is relatively easy for mining and manufacturing to stop production and reduce production capacity, although there are also doubts. But neither agricultural products nor crude oil de-capacity can be done subjectively.

Farmers in North and South America are reluctant to sell when money allows, while mature U.S. futures markets have plenty of hedging to maintain basis trading.

Therefore, the author finally understands that the de-production capacity of soybeans is bound to be a cyclical change in the volatility of multiple factors overlapping.

The instinct of relying on the weather for a living is that when the weather cycle turns back, the aquaculture industry will have a superposition of capital investment, and at the same time farmers are forced to fallow at the bottom of the cost. These factors occur at the same time, which brings about drastic cyclical changes.

Just like the description of the meteorological cycle written by the author to the client, in a very strong El Niño year, it means that the next spring will quickly change to La Niña climate, which will lead to a climate reversal in the East and West Pacific and bring to the grains of North and South America Unexpected damage.

This long-term wear-away can leave countless traders vulnerable and, even if they see a long-term trend, lose their will and capital in the short-term band, resulting in massive losses.

At the same time, we can also see the great changes in a country's industry. In the future, we can imagine that soybean, corn, rice, wheat, sugarcane, rapeseed and even natural rubber planting will be defeated by overseas low-cost planting areas.

It is difficult to measure the changes in an industry. Human factors are inevitable, but whether it is necessary to do so. Just like the natural rubber industry, Malaysia's acreage has fallen by half since many years ago, but Vietnam has risen rapidly. China's rubber industry will be quickly replaced by lower-cost places such as Vietnam, Northeast Thailand, Cambodia, Myanmar, and West Africa due to rising labor costs. When trying to protect rubber with trade barriers and policies, the downstream tire industry will be in trouble, thus making the entire Chinese rubber upstream and downstream lose competitiveness together.

Such a large pattern is an obvious trend.

Soybean in the entire development process, because of the demonization of biotechnology, anti-genetically modified Chinese will inevitably fall into the situation of the collapse of domestic soybeans in the Northeast. When China is completely dependent on overseas soybeans, and the big grain merchants in South America and the United States have a joint monopoly, China will be caught in a high price to obtain vegetable oil and protein intake. We should be thankful that the expansion of cultivation in South America is on the rise.

With the decline of the overall competitiveness of China's grain industry in biotechnology, planting methods, and labor costs, China will have to pay a huge price to supplement these industries, because the deep-seated fear is that when a country's agriculture is defeated, monopolizing a country's food supply will become a profiteering industry.

Today, I have said so much because commodity consulting will be completely terminated in the next 2016 and merged into the macroeconomic sector. The future of Oak Valley Consulting has only one large macro sector, combining macro, geopolitics, climate, and data to explain the logic of currencies, bonds, real estate, stock markets, and commodities.