Russia Ukraine conflict affects wheat and other grain exports, and international grain prices may rise further.
Previously, affected by the global epidemic, inflation, weather and other factors, the international prices of soybeans, rapeseed, corn and wheat have been at a high level in recent 10 years.
The Shenzhen Agricultural Products Group Co.Ltd(000061) team of CITIC futures believes that the conflict between Russia and Ukraine may destroy the agricultural production zones of the two countries in the short term, affect the transportation routes of global grain in the Black Sea ports, and change the relevant Shenzhen Agricultural Products Group Co.Ltd(000061) international import and export pattern. This will increase global food inflation and the import cost of some grain varieties in China.
The rise in grain prices will also affect feed, putting pressure on China’s breeding enterprises, which are already facing continuous downward prices such as pigs.
international food prices may continue to soar
From the perspective of Shenzhen Agricultural Products Group Co.Ltd(000061) trade impact, Ukraine is China’s largest importer of sunflower oil and the second largest importer of corn. According to customs data, in 2021, China imported 8.24 million tons of corn from Ukraine, accounting for 29.07%.
The data also shows that in 2021, China’s grain imports continued to increase and oil imports decreased slightly. According to the customs data, China imported 164539 million tons of grain in 2021, a year-on-year increase of 18.1%; A total of 10.392 million tons of edible vegetable oil were imported, a year-on-year decrease of 3.7%.
Recently, the prices of relevant commodities in China have risen. According to the data of Tonglian, datayes! According to statistics, the main contract of CBOT soybean oil futures rose once in the session last week, hitting a record high of 74.58 cents / pound. In terms of internal trading, the main contracts of soybean meal, rapeseed meal, corn and soybean oil futures have risen by 19.8%, 20.1%, 5.8% and 14.4% year to date respectively. The main contracts of palm oil futures have risen for six consecutive trading days recently; The price of soybean meal ETF has risen by more than 27% since the beginning of the year, ranking first in the whole market.
In order to curb speculation, the big commercial exchange decided to adjust the margin level of speculative trading of palm oil futures 2204 and 2205 contracts from 10% to 12% from the settlement on February 25, and the rise and fall limit and the margin level of hedging trading remained unchanged at 8%; The speculative trading margin level of soybean oil futures 2205 contract was adjusted from 8% to 9%, and the limit range and hedging trading margin level remained unchanged at 7%.
Zheng Shang Exchange decided to adjust the trading margin standard of strong wheat, common wheat, early indica rice, japonica rice and late indica rice futures contracts to 8% and the limit range to 7% from the settlement on March 2.
On the basis of supply and demand, the US soybean spot market has risen strongly recently. Zhang Yinggang, an analyst at Huishang futures, said that the tightening of global soybean supply and demand situation has boosted Chicago soybean futures to a phased high. The export demand of us beans remained active, and the superimposed soybean oil futures rose driven by the sharp rise of international crude oil, which also supported us beans; In terms of South American beans, the weather in South America is unfavorable to the prospect of soybean production. Buenos Aires Grain Exchange said that Argentina’s soybean yield may continue to decline in the next few weeks.
Everbright Securities Company Limited(601788) research report points out that due to the occurrence of the Russian Ukrainian war, there is obvious uncertainty in the production of local grain enterprises in Ukraine, and Shenzhen Agricultural Products Group Co.Ltd(000061) planting and production represented by wheat and corn will be significantly affected. Prior to this, the global epidemic has greatly increased the attention of countries to food security, and international food prices have continued to rise.
At present, international grain prices have been at a high level. The prices of soybeans, rapeseed, corn and wheat are at a high level in recent 10 years. According to the Chicago Board of trade (CBOT), the futures contract prices of wheat, corn and soybeans are at the highest point in recent five years. The prices of the above three grain futures varieties have increased by 31%, 32% and 20% respectively since the beginning of 2021.
feed and breeding sector profits affected
In the short term, the grain price will be pushed up again, which will also increase the feed price. Accordingly, the profits of listed companies related to A-share feed and breeding sectors will be affected.
Since mid February, more than 30 feed enterprises including Zhengbang, New Hope Liuhe Co.Ltd(000876) , Haida, Beijing Dabeinong Technology Group Co.Ltd(002385) , Cargill, Tongwei, longfengtai and tianbang have successively announced to increase the price of pig feed by 50 ~ 300 yuan / ton. Guizhou Banghong agriculture and animal husbandry Co., Ltd. also announced a price increase of 600 yuan per ton for all concentrated materials.
Statistics show that corn and soybean meal are the main raw materials of the feed industry, and the total cost of the two accounts for more than 50% of the feed production cost, but the high feed price has limited boost to the performance of relevant feed listed companies.
“Feed raw materials affected by the rising market, the revenue and profit of feed business have increased, but the soaring price of raw materials has also restrained the purchase of soybeans, reducing profits.” Industry insiders said. At present, there is an inversion between the breeding cost and the price of livestock and poultry, which leads to the increase of losses of breeding enterprises and further leads to the decline of livestock and poultry production capacity, which in turn inhibits the demand for feed.
In addition, the prices of corn and soybean meal are greatly affected by factors such as climate, farmers’ planting preference and total agricultural harvest. They have fluctuated to a certain extent in recent three years, increasing the operation difficulty of the downstream feed industry.
Especially for enterprises mainly engaged in breeding, it is under pressure at both ends. On the one hand, feed prices continue to rise, on the other hand, pig and poultry prices continue to decline.
According to the performance express of 2021 recently disclosed by Wens Foodstuff Group Co.Ltd(300498) disclosure, the company achieved a total operating revenue of 64.963 billion yuan in 2021, a year-on-year decrease of 13.31%, a net profit attributable to the parent company of -13.337 billion yuan and a profit of 7.426 billion yuan in the same period of last year.
For the huge loss of performance, Wens Foodstuff Group Co.Ltd(300498) said that during the reporting period, the company sold 132174 million pigs (including pigs and fresh products), and the average selling price of pigs was 17.39 yuan / kg, a year-on-year decrease of 48.18%. During the reporting period, the price of live pigs fell sharply. At the same time, the cost of raising pigs was pushed up due to the continuous rise in the price of feed raw materials, the fattening of some pig seedlings purchased by the company and the continuous promotion of pig breeding optimization.
In addition, Jiangxi Zhengbang Technology Co.Ltd(002157) expects a loss of 18.2 billion ~ 19.7 billion yuan in 2021 New Hope Liuhe Co.Ltd(000876) it is estimated that the loss in 2021 will be 8.6 billion ~ 9.6 billion yuan Tech-Bank Food Co.Ltd(002124) it is estimated that there will be a loss of 3.5 billion to 4 billion yuan in 2021. In addition, according to incomplete statistics, at present, seven pig breeding enterprises released sales data in January, of which 6 had a year-on-year decline in sales revenue.
According to the analysis of the research team of Dongzheng futures, at present, the pig market is at the bottom of the cycle, and the pig stock base is large, so it is decided that the pig breeding will be in the range of low profit to loss in 2022.
Faced with the current rising trend of grain prices, some companies said they were planning alternatives.
On February 24, Jiangxi Zhengbang Technology Co.Ltd(002157) said that although the cost performance of rye is high, if the subsequent purchase of rye is affected, it does not rule out the possibility of selecting raw materials such as Australian wheat and French wheat for replacement New Hope Liuhe Co.Ltd(000876) Liuhe also has the above alternatives. Feed enterprises have matured their research on low protein diet technology and soybean meal substitution. Under different raw material prices and supply conditions, they can adjust and optimize feed formula through technology research and development.
The above industry insiders believe that in the long run, after the high price state of Shenzhen Agricultural Products Group Co.Ltd(000061) sector lasts for a period of time, there will be a decline in the premium. In the later stage, there will be negative price factors such as the dumping of reserves and the increase of output in South America, which will make the disk and the market return to rationality.
