Minmetals Futures Chongqing Sales Department
Author: Wang Jun
Key takeaways:
From the perspective of delivery, since the 2109 contract, the contract has run smoothly, the delivery has been smooth, showing a high degree of maturity (delivery time point, delivery location), the 2209-2301 contract has been delivered 19, 34 and 47 lots respectively, and compared with the Henan spot before the delivery month, the discount is 300, 1900 and 2500 points respectively, and the bears have shown a high initiative.
From the perspective of the cycle, the bottoming year that is currently in the middle of the cycle, the cycle bottom may be in April-June this year, and the probability is that it will be in May this year. In the short term (March-June), it is expected that the price will still be under pressure, and the price is expected to run in the range of 11-14 yuan / kg. In the medium term (June-December), prices are expected to rebound, with highs near August, September or the end of the year, and highs expected at 16-18 yuan / kg; production capacity (i.e. sows) bottom at the end of the 3rd quarter, before maintaining dematerialization.
In the long run, due to the continuous destocking of production capacity in the first and second quarters of this year, it is unlikely that there will be a surplus state after the Spring Festival next year, coupled with the weight loss of the barn, the probability of the price falling below the cost line is small, and the pig price will not have three bottoms; therefore, from the price point of view, the probability of this round of cycle is likely to bottom out in March and May this year. Due to the high probability of production capacity bottoming out at the end of the third quarter of this year, the corresponding supply will bottom out in the second half of next year, so the price is likely to peak in the second half of 23 years; due to the long time of capacity destocking and accumulation, it is expected that the height in the second half of next year is expected to reach a height of 24-26 yuan / kg.
01
Delivery review
Since the 2109 contract, the delivery of pig futures has run smoothly and shown a high degree of maturity (delivery time point, delivery location), the 2209-2301 contract has been delivered 19, 34 and 47 lots respectively, and compared with the Henan spot before the delivery month, the discount is 300, 1900 and 2500 points respectively, and the bears have shown a high initiative. From the location point of view, in addition to the Shandong region, the other 5 regions have delivery, of which Jiangsu delivered 149 hands, Hubei delivered 72 hands, Henan delivered 16 hands, Anhui 3 hands, Zhejiang 1 hand, Jiangsu and Hubei accounted for 91.7%, from the distribution of large enterprises and delivery premium settings, Jiangsu and Hubei have an absolute advantage. In terms of participants, COFCO meat delivered 188 hands and Makihara delivered 47 hands, accounting for more than 97.5% of the two companies. In terms of delivery methods, the warehouse receipt delivery is 109 lots, and the car plate delivery is 132 lots, accounting for 45.23% and 54.77% respectively, mainly because the delivery cost of the car plate is lower, and there is no storage fee and warehouse fee.
02
Cycle review
The pig cycle is about four years, the cycle is superimposed with seasonality within the year, and the four years in the cycle can continue to be divided into a rising year, a peak year, a decline year and a bottom year. From the perspective of the cycle, 2022 and 14 good 18 years belong to the bottom year in the same cycle, and the current pig price trend coincides relatively high, and the trend of next year, that is, 2023, can refer to 15 years and 11 years.
03
Fundamental review
The official and institutional breeding sow stocks peaked in June last year and accelerated after September. It is inferred from this that the inflection point of pig out of the barn (lagging sows for 10 months) will appear in April and May of this year, after which the price is expected to turn from falling to rising, and now in March and April this year, we expect that pig prices will continue to bottom out and lead to the industry continuing to enter a deep loss stage. As of January this year, the sow inventory data fell by only 6% compared with the peak in June last year, and the normal inventory of 42.9 million heads compared with the normal inventory of 41 million heads in the balance level is still high, so we expect that although there will be a rebound in the second half of the year, it will not exceed the expected increase.
Supply point, the earliest inflection point may come in April this year, the latest July, demand start is generally in the middle and late 2 quarters, April-June market bottom is possible, and can be slow to multiply, pig prices after the bottom of the slow rise is likely; pay special attention to the weight, sow elimination and other variables that reflect the mood and the rhythm of the barn.
Piglet birth, last September piglet peaked and fell, corresponding to 5-6 months later that is, after March this year's pigs out of the barn, the theoretical output of the barn before May remained high, but the piglet inventory in the early stage of the decline rate is slower, or lead to the initial pig price to slowly rise mainly, the strength is general.
As far as the short-term market is concerned, the supply pressure between the second and third quarters of the first half of the year is still large, divided into two levels: supply and demand, and the short-term pressure on the supply side (inventory) is still large, and from the perspective of the fresh-frozen product price difference, the demand is still relatively low. On the other hand, it is expected that the weight of pigs will slowly decline in the future, which is conducive to the gradual easing of supply pressure.
Overall, in the short term (March-June), the price is expected to remain under pressure, and the price is expected to run in the range of 11-14 yuan / kg. In the medium term (June-December), the price is expected to rebound, with the high point near August, September or the end of the year; 6-9 months, due to the slower de-industrialization of sows after peaking in June last year, coupled with the common substitution of binary instead of three yuan, it is expected that the price recovery will be slower and will not be very violent, and the high point is expected to be 16-18 yuan / kg; the production capacity (that is, sows) is at the end of the 3rd quarter. Next year's Spring Festival after the 2-5 months supply by the 2-7 months of this year's production capacity to determine, because the end of January can be close to the normal inventory and the probability of 2-5 months continue to be significantly reduced, so next year's 2-5 months of theoretical output is unlikely to appear in excess state; coupled with the weight reduction of the bar, the probability of the price falling below the cost line is small, and the great probability of pig prices will not appear three times to bottom out. Therefore, from the price point of view, the current cycle is likely to bottom in March and May. Due to the high probability of production capacity bottoming out in the third quarter of this year, the corresponding supply bottomed out in the second half of next year, so the price is likely to peak in the second half of 23 years; due to the long time of capacity destocking accumulation, it is expected that the height in the second half of next year is expected to reach a height of 24-26 yuan / kg. In general, the destocking of sows from the third quarter of last year to the third quarter of this year determines the pig price trend after the sow bottoms out in the third quarter of this year; and the trend of pig prices after the third quarter and the epidemic situation determine the recovery rate of production capacity; the recovery speed of production capacity determines the high point of next year's cycle and the duration of the high level, which ultimately determines the profitability of next year's breeding, and we will continue to keep track.
04
Future derivation
18-22 cycle, due to the impact of non-plague, the highest increase in pig prices reached 400%, 10-14, 14-18 cycle is a normal increase, the increase from low to high is about 100%, the 06-10 cycle increase of more than 200%, it is speculated that it is mainly due to the price increase of corn and other feed, combined with the current round of corn and soybean meal trend, it is expected that the high point of the 22-26 cycle will increase between 100% and 200%.
This year's high point is near 18 yuan / kg, corresponding to the profit per pig 200-250, we believe that the last year of the pig cycle, this profit is reasonable; next year's high is also the cycle high in August-September 23, corresponding to 25-26 yuan / kg, the low point of the high point rose by about 130%, basically reflecting the sow dematerialization and feed price increase. We reserve the possibility of downgrading this year's earnings and raising next year's earnings.
From the perspective of investment strategy, the far month reflects a certain degree of optimistic expectations, and it is recommended that the contracts beginning with 22 be gradually hedged above 18,000 yuan / ton, and more than 20,000 yuan / ton to achieve basic hedging. Speculation mainly participates in the recent monthly market, 05, 07 short-term weak, beware of tails; 09-01 contract story is strong, the overall range of ideas, 16000-18000 is a reasonable range, from the month before the delivery of 1-1.5 months to participate in the return of near-month delivery, the return is expected to be mainly high.
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