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The tight global soybean supply pattern is expected to ease

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The biggest surprise in the recent US bean market came from the quarterly inventory report released at the end of September. According to the report data, as of September 1, 2021, the total inventory of Old Soybean in the United States was 256 million bushels, an increase of 81 million bushels compared with 175 million bushels in the September supply and demand report. Without changing other variables, the new carry forward inventory in 2021 / 2022 will increase to 266 million bushels, and the stock sales ratio will increase to 6.1%, The tight pattern of supply and demand has been significantly alleviated. Before the report was released, the average estimated and traded inventory in the market was 174 million bushels. After the report was released, meidou fell, and the main contract in November hit a six-month low of 1231 cents / bushel.

Expected increase in global soybean supply

From the supply side, meidou currently lacks the theme of continuing upward speculation. According to the planting progress report released by USDA every Monday, as of the week of October 3, 2021, the excellent rate of American soybeans was 58% and 64% in the same period last year. There is little room for further downward adjustment of the excellent rate; Meanwhile, the soybean harvest rate in the United States was 34%, 35% in the same period last year, and the five-year average was 26%. The weather conditions were normal, and the overall harvest was promoted rapidly. At present, the market is still raising the per unit yield forecast. Stonex raised the per unit yield forecast of soybeans in the United States in 2021 to 51.3 bushels per acre. Previously, it was estimated to be 50.8 bushels per acre in the monthly report released on September 2, which is close to the per unit yield of 50.6 bushels per acre in the USDA monthly report in September. It also estimated that the output of new soybean in the United States was 4.436 billion bushels, higher than the previous estimate of 4.409 billion bushels. The increase of overall production forecast also suppresses the space above the US market.

At the same time, Brazilian soybeans are also in full swing. According to the data released by imea, as of the week of October 1, the soybean sowing rate in Mato Grosso State, the main soybean producing area in Brazil, reached 20.31% in 2021 / 2022, an increase of 14.15 percentage points over the previous week. The soybean sowing rate in the same period last year was only 3.02% and the historical average in the same period was 12.01%. Although the market hyped that the sowing period of Brazilian soybeans may be affected by La Nina climate in the early stage, and it is true that the national sowing progress is slow due to irregular rainfall in September, according to the recent weather forecast, the overall rainfall in the production area is good, a large-scale rainfall will be maintained in October, and the overall sowing step will be accelerated, exerting further pressure on American beans. However, the current market has traded a more pessimistic expectation. If the subsequent USDA unit yield does not increase significantly as scheduled, there may be room for a small increase in meidou.

At present, the market is generally optimistic about the output of new soybean in Brazil. USDA has maintained a production forecast of 144 million tons, up from 137 million tons last year. In the first survey report for the new year, conab pointed out that Brazil's soybean production in 2021 / 2022 is expected to be a record 14075.2 million tons, an increase of 2.5% over the previous year's 137.21 million tons, and the soybean planting area is expected to reach 39.915 million hectares, an increase of 2.5% over the previous year. Stonex gave a record 144.26 million tons, about 1 million tons higher than last month's forecast; It is expected that the sown area of new crops in Brazil will increase by 5% to 40.45 million hectares, higher than the previously expected 40.1 million hectares.

Market analysis shows that Brazil has strong land expansion elasticity. With the strong support of its domestic soybean price, the sown area is expected to continue to grow year-on-year. However, the uncertainty is that at present, Brazilian soybeans are still in the early stage of sowing, and there are still many uncertainties in the follow-up, including price, weather, etc. the record output comes from the political and fundamental support of demand and price in the past years. Whether such sowing enthusiasm can be maintained when these supporting factors or gradually subside, There is still great uncertainty. However, if the sowing enthusiasm continues, the pressure on the US bean market will continue to increase, and there is still some room for downward adjustment in the US market.

Demand promotion is not optimistic

From the demand side, although the sales of American beans are still advancing rapidly with the continuous improvement of domestic crushing profits, its performance is not ideal compared with the same period last year. According to the weekly export sales report released by USDA, as of the week of September 30, the cumulative net sales of soybeans in the United States in 2021 / 2022 were 25.3282 million tons, compared with 40.547 million tons in the same period last year, a year-on-year decrease of 37.53%, while the cumulative sales of soybeans in 2022 / 2023 were 19800 tons, compared with 60000 tons in the same period last year. At present, the completion rate of U.S. soybean sales in 2021 / 2022 was 44.54%, 42.71% last week and 67.73% in the same period last year, with a significant year-on-year decline. China's sales progress may be the main reason for its decline. As of September 30, 2021, the cumulative net sales of U.S. soybeans to China in 2021 / 2022 was 12.4394 million tons, compared with 22.1078 million tons in the same period last year. Whether China's demand can maintain the strong performance of last year is obviously in doubt. Although meidou has reduced its export by more than 5 million tons, it is still possible to further reduce its export according to the current sales progress. However, the uncertainty lies in the follow-up promotion of China US trade relations, and there are still many variables in all aspects.

However, judging from the current situation of domestic breeding end, the expectation of protein consumption is not optimistic. Although the domestic pig stock has returned to the normal level in previous years, the pig price has continued to fall and the industry has suffered serious losses. The data show that the current average loss of self breeding heads is 635.97 yuan, and the continuous loss has been nearly 3 months. Therefore, from breeding to feed end, they are very passive, have poor willingness to purchase and prepare goods, and use materials more carefully. In addition, the current slaughter weight of pigs has also decreased significantly compared with the first half of the year. As of the week of October 8, the average slaughter weight in China has decreased to 120.2 kg / head, down about 10 kg / head compared with the first half of the year. The decline of pig weight is directly reflected in the decrease of feed meat ratio. The feed consumption of 130kg is about 13% higher than that of 120kg fat pigs. Therefore, the reduction of slaughter weight will lead to the shrinkage of single feed consumption at the same time.

In conclusion, the significant increase in stock has indeed brought about a certain increase in feed consumption, but under the influence of feed meat ratio and feed cost, the market is more cautious and more inclined to use low-cost formula in formula, which is not conducive to the increase of soybean meal consumption, and this negative impact will also have a negative impact on the purchasing enthusiasm of domestic imported soybeans.

Market outlook

Generally speaking, meidou lacks upward theme speculation. Although the market believes that the space under meidou is limited on the premise that the supply and demand structure is still tight, the tense inventory structure is constantly loosening from the data and trading mentality released by the current market. Firstly, the pattern of high yield of new American beans was basically determined; Secondly, Brazilian soybeans are also fierce, and the market supply forecast is also at a high level. Finally, China's demand has not seen an obvious bright spot. Therefore, under this pattern, the decline of us soybeans may be inevitable.

The subsequent uncertainty lies, on the one hand, in whether the Sino US trade policy will once again be conducive to the export of soybeans from the United States to China, and on the other hand, in whether the output will be significantly lower than the current expectations due to the planting in Brazil and the fixed output of American soybeans. However, on the whole, the current market lacks the power to continue to rise, and the domestic continuous meal is also dragged down by the weakness of meidou. It is difficult to copy last year's bull market in the follow-up or weak structure.

Source: futures daily


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