Bullish Trend Continues, Soybean Meal Futures Are Stronger

Source: Baocheng Futures Author: Baocheng Futures

The text of the research report

Core point:

Today, the domestic soybean oil market presents a pattern of strong meal and weak oil.soybean mealBefore the impact, the high failed, and the price rose and fell, and the futures price performed strongly, accompanied by a slight increase in positions. Soybean oil in the oil and fat market was volatile and weak,palmOil is strong, soybean palm spreads continue to converge, funds have not withdrawn significantly, and futures prices continue to rely on the 5-day moving average support.

As market focus returns to soy, there is talk of La Niña’s impact on South American producing regionssoybeanThe impact of planting and emergence has emerged, and the weather risk premium is still accumulating. Meanwhile, markets are focused on adjustments to soybean production and year-end stocks tomorrow night in the USDA’s monthly supply and demand report. Before the imported soybeans are effectively replenished, the low domestic inventory and high basis are still the main factors supporting the price of meal oil, and the bullish trend continues.

On the whole, the fundamental support of beans is strong, the bullish trend is still continuing, and the bullish thinking still needs to be maintained. The oil meal was once again converted into strong oil and weak oil, and the price difference between oil meal and soybean palm price both declined, and the downward space was further released.

1. Industry dynamics

1) According to data from Brazil’s Secretariat of Foreign Trade (SECEX), Brazil’s soybean exports to all destinations in October were 4.06 million tons, an increase of 23.41% from October 2021. Among them, the shipment to the top buyer China was 3.23 million tons, an increase of 25% month-on-month and a year-on-year increase of 22.7%. Sales of soybeans and manufactured goods in Brazil’s domestic market were slow last week as protesters blocked Brazilian highways, rising U.S. interest rates and uncertainty over grain exports via the Black Sea. Nonetheless, the researchers say external demand for Brazilian products remains firm. Logistics problems in the U.S. have led international buyers to turn to Brazil due to low water levels in the Mississippi.

2) Data released by the General Administration of Customs of China on Monday showed that China’s soybean imports in October were 4.14 million tons, down 46.4% from 7.72 million tons in September and 19% from the same period last year, hitting a record high of 4.1 million tons imported in October 2014. The lowest import data for the same period since soybeans. China’s soybean imports in the first 10 months of this year were 73.18 million tons, down 7.4 percent year-on-year. The reason for the decline in imports is that for most of this year, domestic crushing profits were meager or even at a loss, which led buyers to reduce purchases; the low water level of the Mississippi River also affected the pace of exports to China. Chicago soybean futures, the global benchmark, hit a 10-year high in June as unfavorable weather in top supplier Brazil reduced soybean production. At the same time, sluggish feed demand from the domestic farming industry has further eroded crush profits and dented Chinese buyers’ purchases of soybeans in the summer. From the end of April to October this year, the soybean crushing profit of Shandong Rizhao has been in a state of loss. But with rising hog prices, a recovery in farming profits and tight supplies of soybean meal, soybean meal prices have been boosted to record levels in some regions.

3) According to the data released by the Brazilian consulting agency Homeland Farmers (PAN), as of November 4, 2022, the soybean planting progress in Brazil reached 65.1%, which was higher than 53.3% a week ago and lower than 67.37% in the same period last year. This is also the largest year-on-year gap since planting began this year. Protest demonstrations have led to the blockade of some roads in Brazil, and weather factors have slowed planting in some states, the report said. From Sunday (October 30), supporters of President Bolsonaro, unhappy with his election defeat to Lula, have staged demonstrations and blocked roads across the country. Among them, plantings in Mato Grosso, Parana and Goiás have slowed down because of the temporary suspension of highways and the expansion of the drought in the past seven to 10 days. Although the planting progress has slowed down, it is still ahead of the average planting progress of the same period in the past five years by 52.07%.

4) According to the data released by the Brazilian consulting agency Homeland Farmers (PAN), as of November 4, 2022, the soybean planting progress in Brazil reached 65.1%, which was higher than 53.3% a week ago and lower than 67.37% in the same period last year. This is also the largest year-on-year gap since planting began this year. Protest demonstrations have led to the blockade of some roads in Brazil, and weather factors have slowed planting in some states, the report said. From Sunday (October 30), supporters of President Bolsonaro, unhappy with his election defeat to Lula, have staged demonstrations and blocked roads across the country. Among them, plantings in Mato Grosso, Parana and Goiás have slowed down because of the temporary suspension of highways and the expansion of the drought in the past seven to 10 days. Although the planting progress has slowed down, it is still ahead of the average planting progress of the same period in the past five years by 52.07%.

2. Spot price list

3. Related charts

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