Daily Report 240915 2015-09-24
Macro Economy
Yesterday US stock market slight decreased in the thin trading and investing momentum; oil price slumped had dragged commodity went low. S&P 500 index closed down 3.98% or 0.2% to 1937.76 point. The Atlanta Fed President Dennis Lockhart said, Fed raise interest rate would indicate healthy US economy; in assessing entire economic outlook, he showed confidence to US solid consumption data. On European side, Euro Zone September composite PMI initial value 53.9 was lower the estimation but, third quarter average value create a four year high level. Though there was indetermination in the internal and external demand, data still show a strong motivation on third quarter economy growth; material purchase in manufacturing industry created nineteen month high level which predicted industrial output in the next few months will grow. Testimony from ECB President Mario Draghi on Wednesday European parliament indicated that, the risk of economy downward showed again, ECB need time to consider whether the risk from economic outlook may become the reason on enhancing stimulus policy.  The ECB management committee members Ewald Nowotny also indicated, although deciders were trying hard to increase inflation in Euro Zone, he still hold cautious attitude on ECB enhancing stimulus in short term.
On domestic side, Chinese president Xi Jinping met executives in 30 enterprises from US and China on Wednesday in Seattle. Xi Jinping indicated, China would continue operating the reform to enhance business relationship between China and America; the cooperation from both side had a great potential; there would be no changes on the upward trend from China economy in a long-term; the fundamentals of Chinese economy were still sound in the long term. Yesterday data showed, China September Caixin manufacturing PMI initial value was 47.0 and created a new low since March 2009. The poor data exacerbated investors’ concerns over Chinese economy. The situation had made offshore RMB sharply dropped. In addition, there were news claimed PBOC had intervened dumping dollars at both offshore and onshore market through part of nationalized bank, which aims to stabilize RMB exchange rate and avoid the weakened data over fluctuated exchange rate. We considered central bank still need to make policy between reduce reserves and hammer on exchange rate, sharply drains of capital was hard to avoid in a short term.

Wednesday copper price got bolster during falling and fluctuated in low point. On macro side, under the hammer of latest China September Caixin manufacturing PMI data, stock market dropped yesterday in the wary of hard landing Chinese economy. Back to copper market, Tuesday LME spots premium $12, inventory further decreased 2925 tons. Domestic spots were discount RMB 10 to premium RMB 60; market sentiment improved but trading and investing was still thin.
On supply side, Peru's energy and mining ministry estimated Peru copper output in 2015 would increase15%-20%, which had already increased 11.2% from this January to July, mainly benefited from copper project of Toromocho and Cerro Verde. Last year Peru copper output was about 1.38 million tons. In addition, WBNS announcement indicated, global copper supply was surplus 122,000 tons from January to July. In 2014, surplus was 298,000 tons. Weaken demand and oversupply was continuing in China; technically, copper price still got downward scope and, we recommend pay attention on prior low point.
New grain is about to come into market at a large amount and, hammer on stale beans is gradually increasing. Current new bean purchasing price is RMB 4100/ton, new grain has came into market at small amount, soya farmers are mainly at inquiry period; merchants hasn’t came into market since high moisture and low protein soybean; buying and selling momentum is thin in both new and stale market.
Soybean meal spots are stabilized; market came into sluggish before holidays, inventory is strong in south and light in north in selling regions, quotation down to RMB 2700-2760/ton. Market still lacks of good news to boosting in a short term, meals will continue the volatile trend and seek the direction for breaking through. We recommend operating with slight positions in short term before holidays.
                                                                           Dong LV (Investment Certificate NO. TZ008452)