Macro Economy Enters A Period Of Adjustment, Commodities Are Weak And Difficult To Reform

After the two quarter of the Chinese economy recovered, the problem of weak real estate market and insufficient endogenous motivation gradually emerged as the steady economic growth lifted the economic effect.

The official announcement of the latest official HSBC PMI in August shows that China's economy has entered an adjustment period in the three quarter.

The weak performance of the commodity market in the two quarter has already deviated from the economic rebound. In view of this, the three quarter economic downturn.

Under the circumstances, the overall weakness of bulk commodities is hard to improve or will continue downward trend. Among them, iron ore, which is related to the real estate market and has a large supply of excess, will become the vanguard of the declining army, and the same oil or oil that is under the pressure of supply will follow closely.

First, real estate demand is sluggish, oversupply is pressing iron ore.

Real estate

Weakness has become the biggest risk factor for the downward trend of the economic and industrial prices.

In the 1-7 month of 2014, the national real estate development investment increased by 13.7% compared with the nominal growth rate, the growth rate dropped 0.4 percentage points over the 1-6 months, the lowest value since this year.

At the same time, the sales area and sales volume of commercial housing also showed a "double drop" situation.

We tend to believe that although the local governments relax the restriction on housing purchase to varying degrees, the decline of the housing market is hard to reverse quickly, and the downward trend of the real estate market remains unchanged.

Along with the real estate market turning pale, the domestic crude steel output growth slowed down obviously. In the first half of 2014, domestic crude steel output increased by only 3%, which means that the demand for iron ore tended to shrink.

However, from the supply side, statistics show that in the first half of 2014, the output of iron ore in the four major mines increased by 14.8% over the same period last year, and the extent of excess supply of iron ore continued to expand, resulting in the continuous increase of port iron ore inventory and the suppression of the medium term market of iron ore.

Besides,

The influence of relatively low import ore is deepening, and the core value of iron ore is moved down.

Because of its low grade and high cost of production, domestic iron ore is at the end of the cost curve. With the gradual decline of global iron ore prices in recent years, the profit level of domestic mines has declined rapidly, and the crowding out effect is gradually expanding.

According to the data of 1-7 months in 2014, the proportion of imported ore in domestic iron ore demand has reached 76%.

The effect of domestic mines being squeezed out of the market is more and more significant, which means that the price of iron ore will gradually close to the cost of overseas mines in the future.

Two, supply pressure is at that time, the overall decline of agricultural products is difficult.

Compared with industrial products, the drag of agricultural products due to the rigidity of demand is obviously smaller than that of the slowdown in economic growth. However, most of the agricultural products are faced with the pressure of oversupply, except for the short term demand warming and other factors.

In the agricultural products, the oil released continuously by the supply pressure will continue downward trend.

In terms of soybean oil, the current start-up rate of oil plants is as high as 50%, and the inventory level of enterprises remains high.

At the same time, as of the end of August, China's import soybean port inventory was 6 million 808 thousand tons, far higher than the nearly 4 years average level of 5 million 885 thousand tons.

However, the actual consumption of oil refineries has not improved significantly, and the profit margins of oil refineries everywhere are relatively low.

Among them, the squeezing profits of oil refineries in coastal areas are still hovering under the profit and loss balance line, and there is no improvement in the Northeast deficit pattern.

According to our estimate, as at the end of August, the profit of Shandong's Rizhao, Jiangsu Zhangjiagang and Liaoning Dalian oil refineries squeezed at -99.3, 10.5, -966.9 yuan / ton respectively.

At the same time, imported soybean oil will soon be hit by the premature soybean market in the North American market.

Bean growth is better than market expectations. As of August 31st, the excellent and good rate of soybean seedlings was 72%, 18 percentage points higher than the same period last year, 18 percentage points higher than the average of 5 years, the highest level in the same period in the past 20 years.

Prior to that, the bean market is expected to continue to be at a high level of 70%.

Therefore, soybean oil, which faces internal and external troubles, will remain weak.

Palm oil, palm oil exports in Malaysia in August amounted to 1 million 280 thousand tons, 5% less than that in July, but the export volume was higher than expected in the month due to the acceleration of exports at the end of the month.

Prior to that, the market expects that palm oil exports in Malaysia will not exceed 1 million 250 thousand tons in August.

Despite the acceleration of exports at the end of the month, weak demand has not been reversed.

Palm oil production in Malaysia is expected to increase by more than 10% in August than in July. Stocks are expected to increase significantly at the end of the month, while the price of palm oil abroad is still strong.

As a result, the price of palm futures in the future will be significantly reduced.

And there is also a problem of oversupply, which is related to oil and fat.

The main reason for the suppression of soybean meal prices is soybean costs.

The cost of soybeans arrived in the four quarter was lower, and the pre-sale price of imported enterprises was basically the same as that of soybean meal.

Under the background of obvious overproduction of domestic crushing production, it is difficult for oil refineries to get excess profits, and their long-term sales contracts are expected to be strong, which may lead to a continuous decline in the soybean meal base and thus drag down the soybean meal price.

Egg prices also face downside in the short term, but the space is limited.

At present, the number of eggs in stock and farmers is low, and the receiving situation is not ideal. The main reason is that the new production layer has not yet entered the peak of egg production, and the old chicken is eliminated, so the number of laying hens is still relatively small, the supply of eggs is tight, and the overall supply is tight.

However, as the weather gets cooler, the laying rate of layers will increase, and the number of suppliers will increase, but the number will not be excessive.

Demand side, double section stock has been completed, food manufacturers egg demand decreased, especially after the Mid Autumn Festival, terminal consumption tends to be stable.

Both supply and demand are not strong. The price of eggs will continue to fall in the short term, but there will be little room for further decline.

The main factor limiting the bottom space of the egg price is the strong support of the basis.

Market for early 8, September, the new egg market is expected to digest ahead of schedule, reaction on the futures market, the price of eggs and other agricultural products fell.

At the same time, the spot price of eggs showed a relative decline, which caused the egg basis difference to turn from negative to positive.

In addition, large areas of rainwater in some areas impede egg pport, and the price of eggs in these areas has risen slightly.

In view of this, we suggest that eggs should be operated in a short way to prevent the risk of rebound.

Three, seasonal demand boost, beans show resistance.

The overall weakness of agricultural products under the pressure of oversupply is hard to change, but we find that the beans are slightly better than others.

In September, the price of Northeast soybean showed a slight upward trend, and the sales price in Heilongjiang area generally increased by 40-60 yuan / ton compared with the end of 8. At present, the mainstream selling price is 4600-4640 yuan / ton, and the regional market price is as high as 4700 yuan / ton.

In the meantime, a feature is very obvious, the US disk has broken a thousand points, and even the disk has significantly declined.

From the comparison trend of CBOT soybean price and domestic spot purchase price in recent years, we can see that although the general trend is the same, the trend differentiation is also accompanied by it. Especially in June this year, the trend of divergence between the two countries is gradually widening. The main reason is that with the advent of the double festival and the gradual opening of the major colleges and universities, the consumption of food in the market has gradually increased, and the former trade entities are afraid to hoard large quantities of goods.

Therefore, the weaker soybean will become the dark horse of many vulnerable varieties of agricultural products, and it also provides a choice for us to hedge the weather and other risk factors that can easily affect agricultural products.

Four, operation suggestion

To sum up, under the macro background of the "three phase superposition", commodities have been in the downstream channel since the beginning of this year, and the slowdown in the beginning of the three quarter is expected to accelerate the pace of the downward trend of commodities at the end of the three quarter.

In view of this, we have a holistic approach to bulk commodities.

In terms of specific operation, industrial products, which are more vulnerable to the downward impact of the macro-economy, especially iron ore, which is subject to the weak real estate market, can be intervened and allocated a higher proportion of positions. However, the smaller agricultural products that are dragged down by the macro-economic downturn should choose to sell their own basic oversupply of more obvious oil, soybean meal and eggs, and configure a lower proportion of positions. At the same time, due to uncertainties such as weather, soybean hedging risks need to be done more.