One of the three conjectures about the influence of national reserve on wheat price

Recently, under the influence of the weakening demand caused by the decrease of the opening rate of milling enterprises and the gradual decrease of the amount of wheat flowing in the market, the domestic wheat price has entered a stable period. As we all know, the stable period is the most difficult trading period, because at this stage, the market stabilizes, the price difference between places narrows, the trade profit is small, and events that may affect market fluctuations may occur at any time, so it is difficult to judge the trend in the later stage. Therefore, most traders and milling enterprises adopt the wait-and-see strategy of suspending purchase and sale or using as-you-go during the stable period. The author (Yang Jinshan, China Grain and Oil Information Network) believes that the wait-and-see strategy is a very correct choice, but during the wait-and-see period, we should not only wait and see the changes of the surrounding competitors, but should first find out what are the main factors affecting the future trend, and then carry out analysis and textual research, so that we can make a judgment in advance and formulate targeted solutions to win the first opportunity. So, what are the main factors that will affect the wheat market in the near future? The author believes that the national wheat storage policy will have a great impact on the market in the later stage. In the next few days, the author will make a guess from three aspects: the starting price of the State Reserve, the special auction and the subsidy of powder enterprises, and give a judgment for your reference. In this article, the author will elaborate on the first conjecture: whether the State Reserve will lower the starting price.

The market has tried, and the price reduction is acceptable.

Recently, there are rumors in the market that the auction of wheat by the State Reserve will begin in January 2016, and the starting price will be reduced from 1.23-1.25 yuan / jin to 1.19-1.22 yuan / jin. This leads to the author's first guess: whether the State Reserve will lower the starting price. The author thinks that it is difficult to say how much it is, but it is very likely that it will be lowered. Let's show you a set of data first. Southern Wheat Trading Market Co., Ltd. will carry out spot wheat bidding on December 25, 2015. Taizhou Gaogang Grain Purchasing and Marketing Company plans to sell 2700 tons of red wheat. The starting price is now announced as follows:

From the above data, we can see that the auction price of wheat in Jiangsu market has declined, and the starting price of red wheat in Jiangsu has been between 1.19 and 1.22 yuan / jin. In addition, the author asked the person in charge of some flour enterprises in Jiangsu to learn that due to the small volume, it does not play a substantial role for large flour enterprises, so the willingness to participate in the auction is not strong, but all said that the starting price is more reasonable. In other words, the price of 1.19-1.22 yuan per jin can be recognized by the market. Moreover, the starting price is also higher than the purchase price of the State Reserve, so the State Reserve is likely to adjust the starting price with reference to the market price.

The inventory of the State Reserve is huge, and reducing the price can free up the inventory.

With the price accepted by the market, will the State Reserve accept it? Next, the author will tell you another set of data. Since 2015, China has accumulated 6.3722 million tons of domestic temporary wheat, down 7.3538 million tons from the same period last year and 53 percent from the same period last year. At present, there is very little surplus of wheat for temporary storage in 2013, but the cumulative turnover of wheat for production and storage in 2014 is only 1.15 million tons. In addition, the wheat for temporary storage has not been auctioned in 2015, so the remaining quantity of wheat for storage is still large. According to statistics, as of the first ten days of December, the national surplus stock of wheat is 38.96 million-39.96 million tons. Of these, Jiangsu 8.426 million tons, Anhui 9.251 million tons, Henan 18.336 million tons, Hubei 2.003 million tons. What is the concept of about 40 million tons of wheat? Equivalent to the total suspension of wheat supply from other channels in the market, it can also maintain the consumption of the domestic market for at least four months. How to deal with such a huge inventory will be an important issue for the State Reserve to consider, so price reduction to stimulate transactions may be a powerful means of the State Reserve.

To sum up, it can be said that in 2016, when wheat continues to implement the national market support reserve and the price will still be 1.18 yuan / jin of third-class grain collection and storage standards, the state reserve of wheat storage is very important. Coupled with the continuous depression of the milling industry in recent years, it is also very possible to lower the starting price to benefit the milling enterprises. So the author's first guess is that the State Reserve will lower the starting price of wheat and is expected to adjust the starting price to about 1.20 yuan / jin. The recent wheat market price of less than 1.20 yuan / jin of areas can be moderate stock, but do not bet too much on the future, especially flour enterprises. Because the second biggest conjecture of the author's three major conjectures is whether the State Reserve will have another special auction, if it is started, the flour enterprises will leave inventory for the special auction, then the cost control in the later stage will be more effective. Whether the State Reserve will start another special auction will be described in detail in the author's next manuscript, please look forward to it.