News summary

U.S. soybean prices rise amid concerns about crop losses in Brazilbaccaratpoker, the domestic soybean meal spot market is weak but the basis has limited downside; in terms of sugar,baccaratpoker, the domestic spot market has resisted decline, but in the long run, supply will increase, and it is recommended to sell short on rallies.

Newsletter text

[Soybean meal market dynamics] Overnight U.S. soybean futures July contract closing price at 1,246baccaratpoker. 75 US dollars/bushel, an increase of 1.1baccaratpoker.53%。Markets continue to be affected by concerns about crop damage in the Brazilian state of Rio Grande do Sul, where excessive rainfall and floods have severely hindered the transportation of goods. The weekly crop progress report released by the U.S. Department of Agriculture shows that as of May 19, the soybean sowing completion rate reached 52%, exceeding the market forecast of 49%.

Chinese customs data pointed out that in the first four months of this year, China's soybean imports from the United States decreased by 40% year-on-year, which in turn increased its purchases of Brazilian soybeans. The market has greater flexibility in its advance judgment of Brazil's production. The U.S. Department of Agriculture's May report made a small adjustment to Brazil's production, with a reduction of only 1 million tons. This difference in expectations between different entities may become an uncertainty factor in the market.

Domestic soybean meal spot prices are currently showing a weak trend. Due to poor feedback from the spot market, especially in recent months, the basis has continued to hover low. Despite this, there is limited room for downside of the basis. Once the empty basis loses its profit margin, funds will shift to multiple bases. If the rise in U.S. soybean prices can be coordinated with the rise in domestic soybean meal basis, then the upward momentum of the market cannot be ignored. Operationally, it is recommended that investors should be cautious about holding multiple orders. Although below US$1200/bushel is considered a low position, there is still large room for reversal in prices above 1200.

[White Sugar Market Outlook] In the international market, Brazil has started squeezing in the new season, and sugar production has grown more than expected year-on-year. Preliminary data has put pressure on sugar prices. At the same time, sugar production in India and Thailand in the northern hemisphere is expected to improve, but weather changes need to be closely monitored.

Spot sales in the domestic market are picking up and will be relatively resistant to decline in the short term, which will support futures prices. Due to the absence of a window period for imported sugar to arrive in Hong Kong, domestic contracts in recent months are more resilient than foreign sugar. From a long-term perspective, international supply and demand may shift to easing, and domestic supply will increase significantly. Long-term investors should adopt a short selling strategy.