Daily Report 270516 2016-05-27
Soybean
Domestically, DCE soybean night section dropped. Recently price fluctuated a lot. Oil against meal ratio shock. From spot goods side, soybean price of South and North China remains stable. Purchase and sales of all districts is plain. Market filtered goods purchase price is RMB 3900-4000/ton. Soybean with high protein is little. Hei Longjiang continuous raindrop recent days cause East China soybean sowing difficult to carry out, but the effect on whole sowing progress is not big. Recently Middle and South China dry land sowing has finished. Because of spring sowing and the prediction of future soybean storage auction, market observation mood is strong. Traders of South and North are not enthusiastic with tracing upward tendency. Short term price is under consolidation stage. From soybean meal side, oil plant of several places increased price, the range is between RMB 50-80/ton. Spot goods price is strong. The increase of futures market price stimulated trading volume. Since we hold the opinion of fluctuation and strong tendency for US section, and domestic breeding recovery situation is good, soybean meal is long in the middle term. As for operation, soybean meal long position is held when rollback happens, and arbitrage between oil and meal observe temperately.
 
 
 
Copper
Thursday copper price rushed high then rolled back. US index resisted upward motion. Nowadays US official statement of interest hike is more and more frequent. US core CPI is more than 2. Recent increasing oil price push CPI under the background of raise. Bulk commodity is under the pressure of US interest hike and US dollar bolster. In addition, China Central Bank claims that M2 increase has no choice. M2 increase rate will release consider future base level. The atmosphere is not favorable for copper market. From basic level, LME spot goods premium increased $3.25 to $21. Storage increased 725 tons to 156000 tons. Domestic spot goods premium decreased 10 yuan, which is premium 40 to premium 80. Price continuous rally boosts selling. Atalaya copper mine starts production since first season this year. The output is 4048 tons and cost is $4950. Now this company is under loss situation. Technically, recently copper price is rallying, and fluctuation in short term can’t avoid. Observe first and wait for new short opportunity.
 
 
 
Nature Rubber
Yesterday Shanghai rubber rushed high and rolled back. US spot market: domestic spots price is 1210-1230(+20); domestic cargo price is 1230-1240(+20); US RSS spots price is 1460-1470(+10); US RSS cargo price is 1540-1560(+20); mixed rubber price is 9500-9600 (+100). From news side, the Fed monetary analysis claims that stock market fluctuation last year raised M2, hence M2 may decrease significantly in the future months. With the disappearance of base effect, increase rate of M2 will return to normal. Stable monetary policy will continue. Overall, nature rubber is in coincidence with seasonal factors. From macro level, main bulk industry is in a rush. Shanghai rubber futures price is predicted to be lower than RMB 10,000, but is technically near the bottom. Short position can be reduced at low point, and overall is a weak tendency.



Macro Economy
Domestically, Chinese Ministry of Finance claims that until end of last year. National government debt is 39.4% of total GDP. Government also has space for debt. Government can increase leverage periodically. Support enterprises to gradually "deleveraging", the local government debt rate was 89.2%, lower than the internationally accepted warning value, the overall risk is controllable. In addition, the central bank monetary policy analysis group wrote in CBN claims that M2 growth rate in coming months will be significantly decreased. Central bank will continue to implement prudent monetary policy, to create a neutral moderate monetary and financial environment for structural reforms. We expect the domestic monetary policy will not change much, and small possibility of further easing.
                                                                    Dong LV (Investment Certificate NO. TZ008452)