During the domestic "May Day" holiday, soybean meal became the "most beautiful boy" in the international commodity market, while crude oil prices were seriously "injured".
During the domestic holiday, the trend of bulk commodities was clearly differentiated, with most agricultural products rising, led by soybean meal, while industrial products generally declined, crude oil prices fell significantly, gold prices fell to a one-month low, and non-ferrous metals also generally fell. Among them, CBOT soybean meal rose the most, reaching 4.83%, close to the high point of the year, and the largest decline was crude oil, WTI crude oil fell 5.41%.
With the advent of summer in the northern hemisphere, the impact of extreme weather on the agricultural product market has increased, and the hype of "weather theme" is bound to heat up further, and soybeans will continue to be the agricultural product that the market pays the most attention to. Although the long position of industrial products is profit-taking, the overall position is still high, and the market still has further upward momentum.
Extreme rainfall continues in southern Brazil, and international soybean meal soars
During this year's "May Day" holiday, CBOT soybean meal rose by 4.83%, and the main July contract approached the high point of the year. The upside began with a strike action in Argentina, with CBOT soybean meal rising significantly on April 29, followed by a rally in the U.S. soybean market as rains and flooding in southern Brazil damaged unharvested soybean production in Rio Grande do Sul.
Zhou Yuyu, an analyst of agricultural products at Nanhua Futures, said that at present, extreme rainfall weather has a greater impact on the soybean harvest in southern Brazil. Rio Grande do Sul, the second-largest soybean producing state after Mato Grosso, had only 60 percent of the harvest by the end of last week, making it the most affected region of the rains.
This month, the Brazilian National Commodity Supply Company (Conab) had expected a 68.1% recovery in soybean production in Rio Grande do Sul to 21.887 million tonnes compared to last year. However, due to the current severe weather, the market estimates that the state's soybean production could fall by 10% to around 20 million tonnes. The main soybean producing areas in Argentina have also been affected by rains, and the harvest has slowed down, with only 36.2 percent harvested so far. The Argentine Grain Exchange lowered its forecast for Argentina's soybean production to 51 million tonnes.
The market is currently trading on the impact of rainfall and flooding in the soybean producing areas of southern Brazil, but the weather worries in the US soybean producing areas are still in the future. Zhou Yuyu said that from the current weather forecast, the rainy weather in the soybean producing areas of North America is expected to ease next week, and the extreme rainfall in southern Brazil is expected to continue next week, which will continue to affect the harvest in Rio Grande do Sul, thereby impairing the yield of unharvested soybeans.
Weather is still the key to the future trend of agricultural products
The rise in international soybean prices will directly benefit domestic soybean meal and soybean prices. Deng Shaorui, an analyst at Huatai Futures, said that the current domestic soybean meal market pricing is mainly based on Brazil, and Brazil's premium continues to be firm, which has a more obvious supporting effect on soybean meal. With the support of the current premium, the price of soybean meal may be strong in the future.
"We tend to overweight the soybean meal 2409 contract. Yao Xinghang, an analyst at Jinxin Futures, believes that under the support of the Brazilian premium, the soybean meal 2409 contract has been at the 3300 mark for a month, and the industry has no substantial profit driven, and the open interest once surged to 2.14 million hands, the highest in the same period in the past five years. Moreover, the 09 contract is in the U.S. bean planting season, looking back on the past trend, most of them will be accompanied by the weather speculation in the critical period of U.S. bean growth, and this year is no exception.
Compared with the monthly price decline of 4.24% in the soybean meal spot market in April, the soybean meal futures market is significantly more optimistic about the future trend expectations, with the monthly increase in the price of the domestic soybean meal futures index reaching 2.91%, and the soybean meal ETF (159985), which tracks the soybean meal futures price index of the domestic DCE, also rose by 2.39% in April. The soybean meal ETF has risen by 24.41% in the past year, in addition to sharing the rise in soybean meal prices, it also has a long-term rollover income, and the fund size has increased from 200 million at the beginning of 2021 to 640 million now, and the share has tripled in three years.
Crude oil plummeted by more than 5%, and industrial products as a whole rebounded
Compared with the international soybean meal price close to the year's high, the international oil price fell significantly during the holiday, hitting the largest single-day decline since early February, and the gold price also fell to a new low in nearly a month. Among them, the price of crude oil futures in New York fell by 5.41% during the May Day holiday, and Brent crude oil in London fell by 4.8%. The price of gold fell by 1% and the price of silver fell by 1.11%. In addition, non-ferrous metal prices also saw an overall pullback, with LME copper prices falling 2.51% and LME aluminum prices falling 1.285%.
Overseas long funds took profits, which became an important reason for the market pullback. According to the latest data released by the U.S. Commodity Futures Trading Commission (CFTC), as of the week of April 30, overseas long funds reduced their positions in crude oil, precious metals and non-ferrous markets.
Among them, speculators' net long positions in WTI crude oil futures in New York decreased by 17,887 contracts to 139214 contracts, COMEX gold futures speculative net long positions decreased by 9,018 contracts to 167139 contracts, COMEX silver futures speculative net long positions decreased by 6,195 contracts to 33,760 contracts, and COMEX copper futures speculative net long positions decreased by 2,907 contracts to 64,303 contracts.
In the oil market, investors eased fears of possible supply disruptions in the Middle East, with strong U.S. oil production and signs of slowing demand pushing market prices lower. Liu Shunchang, an analyst at Nanhua Futures, said that the short-term geopolitical situation has eased, and options indicators show that the geopolitical premium has continued to weaken since the Iran-Israel conflict, and a new round of Palestinian-Israeli ceasefire negotiations is currently underway, and progress may be made. The market should continue to monitor the progress of the ceasefire agreement and when Israel will launch a ground offensive against Rafah.
For the price of gold, despite repeated expectations and price ups and downs, the market is still not expected to be a reversal for a short-term pullback, and the decline is more of a layout opportunity. Fang Shichao, a macro researcher at Guolian Securities, believes that the demand for gold purchases by the central bank may remain at the current high level, and various risk factors are difficult to fall significantly in the short term. This means that gold prices are likely to remain elevated. In the medium term, with the Fed's interest rate cuts and the decline in US real interest rates, the price of gold is still expected to rise further.