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I'm high! The atmosphere of A-share bull market is getting stronger and northward funds are running into the market! Will agricultural products be the next "tuyere" for commodity futures?
Jul 4,2020 10:27CST
translation
Source:Futures daily
The content below was translated by Tencent automatically for reference.

SMM: on July 3, the three major A-share indexes fluctuated higher throughout the day, with the Prev rising more than 2% to a 15-month high. Northbound funds bought a net purchase of 13.194 billion yuan, exceeding 10 billion yuan for the second day in a row. Market participants remind that the recent market has accelerated the upward trend, the trading volume broke through the trillion yuan mark, if the follow-up trading volume can not maintain a high level, it is likely that the driving force for the rise will be exhausted.

Recently, with the improvement of the market supply and demand pattern, the performance of international oil prices is strong, and the inner disk fuel oil and asphalt are also gradually upward. Especially the international oil price, under the support of the high implementation rate of OPEC+ production reduction and the good situation of resuming production in various countries, both Brent crude oil and WTI crude oil have broken through the first line of 40 US dollars per barrel.

Analysts said that given the current very high implementation rate of OPEC+ production cuts and the threat of a price war in Saudi Arabia, the high implementation rate is expected to continue for some time to come, becoming the core driver of the crude oil market.

Recently, agricultural products have risen to a certain extent, but their rebound rate is not as fast as that of non-ferrous, chemical and other industrial products. Analysts believe that in addition to the global climate, locust plague, epidemic situation and other factors that have a certain impact on the global supply and demand of agricultural products, the absolute prices of agricultural products are lower than those of other sectors. Some of China's agricultural products need to be imported in large quantities, and changes in the RMB exchange rate have increased the actual cost of China's imported agricultural products, all these factors have boosted the prices of agricultural products to a certain extent.

A-share volume upward, is the bull market coming?

On July 3, the three major A-share indexes fluctuated higher throughout the day, and the brokerage plate rose again, leading to a collective rise in major financial concepts such as insurance banks. The Prev rose more than 2%, reaching a 15-month high, and most of the theme plates rose, while individual stocks rose more than the limit.

As of yesterday's close, the Prev index rose 2.01% to close at 3152.81 points; the Shenzhen Composite Index rose 1.33% to close at 12433.26 points; and the gem index rose 1.57% to close at 2462.56 points. The turnover between the two cities was 1.17 trillion yuan, breaking the trillion yuan mark for the second day in a row. 2775 shares rose and 980 shares fell in the two markets. Northbound funds bought 13.194 billion yuan net, the second consecutive day of net purchases of more than 10 billion yuan, of which Shanghai stocks net inflow of 8.041 billion yuan, Shenzhen stocks net inflow of 5.153 billion yuan.

Affected by this, the main contracts of the three major stock index futures closed up collectively. Among them, IF2007 rose 93.8 points, or 2.17%, to close at 4407.0 points; IH2007 rose 89.4 points, or 2.92%, to close at 3153.8 points; and IC2007 rose 92.0 points, or 1.55%, to close at 6034.8 points.

For the recent rapid upside of A shares, according to Mao Lei, a researcher on Guotai Junan Futures Stock Index Futures, it is mainly because the large-cap stocks that have a greater impact on the index have been launched. In particular, the recent better-than-expected improvement in economic data is a great boon for cyclical stocks such as banks and real estate. After all, the market formed pessimistic expectations about the economy as a result of the epidemic, which now needs to be systematically revised. Funds are bound to start to focus on large-cycle varieties with low valuations and logical support for improved fundamentals.

"considering that under the influence of the global epidemic, the recent global economic recovery is slow and the momentum is not very strong, and the main economic indicators have not yet returned to the normal level before the epidemic. Under such circumstances, liquidity will not tighten significantly and may remain at a more adequate level as a whole. " Zhao Xiaoxia, manager of the Green Dahua Futures Finance Research Center, expects the strength of the index to last for a long time.

However, Wang Mengying, an analyst at the South China Futures Stock Index Futures, said that the recent market has accelerated, with the trading volume breaking through the trillion yuan mark. If the subsequent trading volume cannot be maintained at a high level, the momentum for the rise is likely to be exhausted. After all, confirming the state of economic recovery is a slow process and may be repeated, while US stock valuations are at historically high levels and there are big hidden dangers.

In this regard, the Galaxy Futures Research Institute macro researchers agree. In the view of the researcher, positive and profound changes are taking place in China's capital market, but the trend of long-term improvement in the capital market has not changed. "of course, short-term fluctuations are inevitable, especially when we note that the circulation of restricted shares in July and August has entered a peak, and future opportunities may be more structural opportunities." The researcher believes that.

As for stock index futures, Mao Lei said that if the bullish pattern continues further, the excessive discount of the index is bound to be repaired. In fact, the discount of the index has narrowed rapidly these days after deducting dividends. As of yesterday's close, the main contract of index IF has been in the spot state of rising water after deducting dividends, and the discount of IC is only 10 points.

Wang Mengying believes that if the subsequent positive mood is no longer, then the futures market will return to the previous state. Therefore, for medium-and long-term bullish investors, it is still appropriate to choose forward quarterly and monthly contracts to establish multiple orders. For investors who hold a short-term view, it is more appropriate to choose the main contract to establish a short order. As for the future, we need to pay more attention to the situation of disk trading volume, spot and futures trading volume have increased significantly, the positive market also means increased vulnerability, guard against the shift of risk appetite.

There is still some upward space for the energy plate.

Recently, with the improvement of the market supply and demand pattern, the performance of international oil prices is strong, and the inner disk fuel oil and asphalt are also gradually upward. Especially the international oil price, under the support of the high implementation rate of OPEC+ production reduction and the good situation of resuming production in various countries, both Brent crude oil and WTI crude oil have broken through the first line of 40 US dollars per barrel.

Considering that the current implementation rate of OPEC+ production reduction is very high, and the countries with low implementation rate are threatened by the price war of Saudi Arabia, the senior researcher of Galaxy Futures Energy Investment Research Department predicts that the high implementation rate will continue for some time in the future, becoming the core driver of the crude oil market. Under such circumstances, even though Chinese purchases may fall somewhat, as the resumption rate in mainstream countries continues to rise, the annual probability of European refinery procurement begins to pick up, superimposed by the advent of the summer consumption season in the United States, global refinery operations are expected to resume to 5 million barrels per day in July. In other words, the shortage of global crude oil demand will rise from 2 million barrels per day in the past to 5 million-6 million barrels per day. The global crude oil market is likely to go out of storage in July.

As for the epidemic that bears are worried about affecting demand during the peak season, in the view of the researcher, although it exists, it does not hinder the marginal upward trend. After all, with good control in Europe and China, there is a good chance that demand will continue to pick up.

In this regard, Donghai Futures Research Institute senior energy analyst Li Wanying agreed. In her view, it is less likely that US crude oil production will continue to decline in July. Especially when the international oil price returns to $40 / barrel, considering that the average production cost of shale oil in the United States is about $36 / barrel, the shale oil industry chain is waiting for the full resumption of production after the price continues to repair.

"although the current rebound in the epidemic in the United States is grim, at least 31 states have reported a rebound in the epidemic, and 11 states have suspended or postponed restart plans, but for the oil market, the market is still most concerned about whether the epidemic will cause social activity to stagnate." Li Wanying said.

Li Wanying said that judging from the current situation, the probability of a situation similar to the complete closure of society in the first quarter is expected to be low, so the impact of the epidemic on crude oil consumption stays on the emotional side for the time being, and whether the negative disturbance intensifies depends on the actual fermentation degree of the epidemic. To maintain a cautiously optimistic judgment on oil prices in July, the risk point is still on epidemic and geopolitical issues.

As for the inner disk fuel oil and asphalt, in Li Wanying's view, with the recovery of demand, the general direction is still bullish for some time to come.

Li Wanying suggested that for asphalt, relevant investors should pay attention to the delay of rigid demand for infrastructure caused by precipitation in the south, as well as the hype about the cut-off supply of Marui oil. Although there is no need to worry too much about the cut-off supply of Marui oil in the short term, considering that China's total import of Marui oil is relatively large, basically it needs to meet the level of 1 million tons per month to maintain refinery start-up demand, therefore, in the long run, the problem of cost speculation is still worthy of continued attention.

As for fuel oil, Li Wanying said that although the recent rebound in shipping demand and crude oil prices, cost support is obvious, prices have risen. However, considering that this variety has the same problem as crude oil, that is, the epidemic seems to be out of control in some European and American countries, it is suggested that relevant investors further track whether the epidemic will lead to a decline in shipping volume and the closure of ports.

Yinhe Futures Energy Investment Research Department senior researcher said that asphalt is worth long configuration, after all, the current spot end of the variety pattern is tight, the market generally expects future demand is OK, superimposed its domestic inventory is also relatively low, even if there are potential risks in the supply of raw materials, long asphalt is still a good choice.

Gu Shuangfei, an analyst at Nanhua Futures Energy, said that for a period of time in the future, just from the supply and demand pattern of the energy system itself, asphalt, PP, plastic, PVC and other varieties are still worth the long allocation, and sound investors can choose to allocate certain crude oil short positions on the basis of being long such varieties, or other energy series varieties with weaker relative fundamentals as short allocation.

The market of agricultural products may start.

According to a reporter from Futures Daily, since May, with the improvement of macro expectations, the domestic commodity index and CRB commodity index have rebounded strongly, and agricultural products, as one of the major sectors, have also risen to a certain extent, but their rebound rate is not as fast as that of non-ferrous and chemical and other industrial products. Chen Jiezheng, a researcher on agricultural products from the Galaxy Futures Commodities Department, believes that the recent improvement in the agricultural market has a lot to do with the overall repair of the post-epidemic era, but also has something to do with changes in its own fundamentals.

The South China Futures Agricultural products Group said that in addition to the global climate, locust plague, epidemic situation and other factors that have had a certain impact on the global supply and demand of agricultural products, the absolute prices of agricultural products are lower than those of other sectors. Some of China's agricultural products need to be imported in large quantities, and changes in the RMB exchange rate have increased the real cost of China's imported agricultural products, all of which have boosted the prices of agricultural products to a certain extent.

For the oil sector, which has maintained a strong momentum for nearly two months, the South China Futures Agricultural products Group said that under the influence of multiple interests and multiple factors, the three major oils have formed a situation of resonance rise. Specifically, rapeseed oil is mainly affected by the uncertainty of imports from Canada, rapeseed supply is tight, so that rapeseed oil inventory is at a historical low; soybean oil is due to the growth of domestic consumption demand after China's epidemic situation has been effectively controlled, and rumors continue to spread in the market that Cofco will collect and store 1 million-2 million tons of soybean oil. Palm oil is mainly boosted by bright export data from producing areas, at the same time, domestic palm oil import prices have been hanging upside down, tight supply has led to continued reduction of domestic palm oil inventories, in addition, the recent strong rebound in international crude oil prices has also boosted palm oil prices.

As for the recent sudden rise of oil, the South China Futures Agricultural products Group said that it was mainly affected by the USDA report. Due to the lower-than-expected quarterly planting area of soybeans and quarterly stocks of soybeans, double interest led to a sharp rise in American beans. Dalian soybean meal also put an end to the long-term oscillation trend.

Chen Jiezheng said that for a period of time in the future, he is relatively optimistic about the legumes in agricultural products, and the pricing centers of soybean meal and soybean oil are all in the CBOT market as a whole, of which soybean meal is the most obvious, while the early stage is seriously undervalued due to macro factors, and recently, with the gradual advent of the "weather market" in the United States, the power to repair the value of beans is stronger. Considering that there are still bright spots in the follow-up of China's import boost, the logic of bean cost-side boost in the domestic market is relatively clear. As for soybean oil, the total domestic oil demand is gradually improving recently, and according to the current oil price difference, it also supports the expected improvement of soybean oil consumption, and the follow-up soybean market is relatively optimistic.

South China Futures Agricultural products Group is more optimistic about rape oil, sugar and cotton. In their view, short-term rapeseed oil is likely to remain strong. After all, there is no final conclusion on the uncertainty of imports from Canada, only some private enterprises in China buy rapeseed, the short-term supply is still tight, and rapeseed oil 09 contract is more likely to remain strong in recent months.

As for white sugar, considering that it is still in an undervalued position, it may still be affected by the global surplus in the long run, but for 09 contracts, due to the rising water in the spot, the contraction of the current price spread may lead to a periodic rebound in sugar prices.

In addition, cotton may be a variety worth paying attention to in the future. After all, the weather hype on the supply side and the recovery of the global economy may push up the demand side and may push up cotton prices for some time to come.

As for the future, Chen Jiezheng said: on the one hand, we still need to pay due attention to the possibility of secondary fermentation of the epidemic. After all, the industrial attributes of many varieties of agricultural products are also relatively strong, which are closely related to the epidemic situation and the macro situation; on the other hand, the overall unilateral trend of agricultural products in the near future is still unstable, and there is also the possibility of repetition in fundamentals, and participants should also make investment decisions on the basis of appropriate research.

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