Global oilseed market: 2021 ends with mixed results, Kanglong regrets fighting again in the Year of the Tiger

 

On Friday, the Chicago Board of Trade (CBOT) March 2022 soybean futures fell by about 1.
5 cents from a week ago, to close at 1,339.
25 cents per bushel
.
The average spot price of US No.
1 yellow soybeans in the US Gulf on Thursday was 14.
2075 US dollars (522.
01 US dollars per ton), down 14.
25 US cents or 1% from a week ago
.
On the Euronext exchange, the rapeseed futures in February 2022 will close at approximately 754 Euros/ton, up 3.
25 Euros or 0.
3% from a week ago
.
The March rapeseed futures of the Intercontinental Exchange (ICE) rose by about 8.
9 Canadian dollars from a week ago to close at 1012.
6 Canadian dollars/ton; the FOB spot price of Argentina’s Shanghe soybeans was US$577/ton (including 33% export tax), which was similar to that of Shanghai.
Zhou is flat
.
The March soybean settlement price on the Dalian Commodity Exchange was 5,870 yuan/ton, down 35 yuan or 0.
6% from a week ago
.

 

　　On Friday, the US dollar index closed at 95.
67 points, down 0.
4% from a week ago
.

 

　　Rapeseed becomes the leader in the oilseed and vegetable oil market in 2021

 

　　In 2021, the global oilseeds, manufactured products and vegetable oils have experienced ups and downs
.
The biggest increase was rapeseed.
European rapeseed rose by as much as 80%, and Canadian rapeseed rose by 70%.
This was mainly supported by the extremely tight supply of rapeseed
.
As far as the three brothers of soybeans are concerned, soybean oil is leading the trend, soybean meal closed lower throughout the year, while soybean futures went out of the trend and fell back
.

 

　　In 2021 global market re-inflation transactions drive prices up

 

　　2021 is the second year of the new crown epidemic.
As the world's major economies recover from the epidemic, strong demand for resources has driven a dizzying rise in commodities.
Crude oil and natural gas have risen by 50% and 48% respectively, a record five years The price has far exceeded the high point before the epidemic
.
Whether it is crude oil (above +50%), copper, aluminum, zinc, agricultural products or soft commodities, they all showed a strong upward trend.
Among them, coffee rose by 70%, and sugar also rose by 22%
.
The reason for such a widespread bull market can be attributed to three reasons
.
The first and most important reason is that the central bank led by the Federal Reserve implemented a super-loose monetary policy, which led to the flooding of market liquidity, prompting a large amount of speculative funds to flow into the commodity market to hedge against inflationary pressures, and inflation trading became a push for commodity prices to go bullish.
The second reason is that the epidemic and related restrictions have disrupted the global supply chain.
The global shipping crisis has caused the demand for chips to potato chips to be unsatisfied; the third reason is that the weather has led to the production of major global producers.
Inflationary pressures have prompted large-scale purchases by importing countries, leading to imbalances in the supply and demand of global agricultural products
.

 

　　South American soybeans start to market

 

　　As far as the global oilseed market is concerned, the focus of attention in the near future is naturally South American soybeans
.
It is currently in the southern hemisphere summer
.
In the Lucas Rio Verde region of Mato Grosso State, Brazil’s number one soybean-producing region, farmers have already harvested the new season soybeans for the 2021/22 season from December 29, about 20 days earlier than last year
.
The early launch of Brazilian new beans will undoubtedly lead to the early closure of the US soybean export window
.
According to data from the US Department of Agriculture, the total US soybean export sales so far this year are 41.
38 million tons, a year-on-year decrease of 24.
2%
.
This means that soybean prices are facing resistance in the short term
.

 

　　At present, droughts and floods in the north and south of Brazil are uneven, the north is overcast and rainy, and the south is scorching
.
A similar situation in Paraguay and Argentina means that there is still uncertainty about the crop prospects in South America.
Some people estimate that soybean production in South America will fall by as much as 10 million tons, while others believe that Brazil's production loss alone will reach 10 million tons
.
According to the estimates of Brandarritz consultant Villamir Brandaritz, the South American soybean production loss has been close to 20 million tons
.
The uncertainty of the weather means that the soybean market has intensified volatility, showing typical weather market characteristics
.

 

　　China will substantially increase soybean planting area

 

　　Xinhua News Agency reported on Sunday that Heilongjiang Province, China's number one soybean producing area, plans to increase the soybean planting area by 10 million acres in 2022, equivalent to 666,667 hectares
.
China’s soybean production fell sharply last year because of the increase in the more profitable corn planting area
.
The Ministry of Agriculture of China estimates that the sown area of ​​soybeans in China will be 8.
4 million hectares in 2021/22, and the yield will decrease by 16.
3% year-on-year
.
At the Central Rural Work Conference last week, the Ministry of Agriculture of China stated that China will increase the production of soybeans and oilseeds, and it has rarely characterized the increase in soybean production as a political task
.
The increase in oilseed production in China will undoubtedly affect import demand
.
However, considering the annual import scale of hundreds of millions of tons, the increase of 10 million mu is only a drop in the bucket, and the symbolic meaning may be more significant
.

 

　　Biodiesel policy deserves close attention

 

　　In our previous report, we published many articles on the policies of the biofuel industry in the United States and Brazil
.
Judging from the current situation, the demand for biodiesel in the United States in 2021/22 is still strong, and with the booming of the renewable diesel industry, the demand for soybean oil in the United States is likely to become more domestic, that is to say, it is more driven by domestic industry demand.
Push, the supply available for export may gradually decrease to a very low level
.
This means that soybean oil prices will still receive long-term support
.
According to a forecast by a German analysis agency, global biodiesel production in 2022 is expected to increase by 1.
4 million tons year-on-year, mainly because the US production is expected to increase significantly, but Brazil's production is likely to decline
.
Earlier in December, Brazilian President Bolsonaro signed a decree reducing the mandatory blending rate of biodiesel in Brazilian diesel to 10% in 2022
.
Brazil originally planned to implement a biofuel blending rate of 14% from March 2022, but the Brazilian National Energy Policy Commission (CNPE) decided in late November to maintain a 10% blending rate in 2022
.
In September of this year, CNPE had already lowered the minimum blending rate of biofuels in 2021 from the originally planned 13% to 10% because of the high cost of biodiesel production
.
Soybean oil accounts for 75% of Brazil's biodiesel production raw materials
.
The Brazilian Government Information Office said in a statement that the government implemented a 10% biofuel blending rate in order to protect the interests of consumers
.

 

　　Will Kang Long regret it in 2022?

 

　　As the inflation rate continues to rise, the central bank's rate hike has become a foregone conclusion
.
In November, the U.
S.
inflation rate rose to the highest point since the 1980s, prompting the Federal Reserve to announce an early termination of the bond purchase program implemented during the epidemic; at the same time, the Bank of England became the first G7 central bank to raise interest rates since the outbreak
.
Other major central banks are expected to follow up next year, while some major emerging markets have already started raising interest rates
.
This means that the macro background of commodities in 2022 is completely different from 2021 and 2020
.

 

　　From the perspective of macroeconomic policy analysis, the rise in prices in 2021 has led to the central bank's policy makers to curb inflation, and interest rate hikes will become the Damocles sword hanging over the commodity market
.
As the inflationary pressure is eased as a result of interest rate hikes, the attractiveness of commodities to large funds will rapidly diminish
.
In fact, data from the US Commodity Futures Trading Commission show that hedge funds' net long orders in the commodity futures market have decreased by 35% from the peak in February
.
Since hitting a new all-time high in October, the Bloomberg Commodity Index has fallen 6.
4%, and it has seen its first quarterly decline since the beginning of 2020
.
Some investment banks have also begun to issue bearish forecasts
.
For example, Citigroup went from being resolutely bullish on the bulk commodity market a year ago to being resolutely and completely bearish now
.
It is worth mentioning that, for different varieties, it depends on the weather and supply and demand, which means that price differentiation and violent fluctuations in the oilseed and vegetable oil markets are inevitable
.

 

　　After rising for two consecutive years, the Beijing Derunlin analysis team believes that it is doubtful whether commodities will rise again in 2022, because the logic of the commodity market is changing, from re-inflation, supply shortages and strong demand in 2021 to inflation.
Pressure is expected to ease, supply is expected to improve and liquidity is gradually reduced
.
As the main engine of world economic growth, China's economic growth is facing the triple pressure of "demand shrinkage, supply shock, and weakening expectations"; high agricultural product prices will encourage farmers to expand planting acreage, and supply is expected to resume growth in the summer and autumn of 2022; the Federal Reserve shrinks its balance sheet It will support the US dollar exchange rate to rise, which will lead to general pressure on the commodity market for US dollar quotations
.
In 2022, there is likely to be a two-day trend of ice and fire.
The first half of the year may continue to rise, and the second half of the year may return under the pressure of supply growth
.