Disaster weather in agricultural industry brings trading opportunities

After 07, the agricultural stock has been greatly increased, and the first processing products will rise when the crop is hit, thus, the attention of the market and the clear price signal make the disaster weather extremely easy to become the agricultural stock speculation hot spot. In response to the strong rainfall and flood disasters in the Jianghuai Basin and northern Guangxi this month and the quantitative estimates of the paddy and Sugar disaster, CICC Shangyang Yang Ke advised to pay attention to the trading opportunities brought by this waterlogging. Due to the excellent hydrophilicity of the seasonal main crop (paddy and sugarcane) in the affected area, as long as the floods do not overwhelm the top for more than a week, production is largely unaffected, and the China Meteorological Administration expects the large range of heavy rainfall to end before July 10, so that the yield on rice and sugar is smaller.　　But when disasters occur, rice prices and speculative speculation of food prices, the procurement of flood-relief equipment, as well as the measures to supplement the chemical fertilizers and pesticides after the disaster, will bring about trading opportunities for related sectors. The impact of disasters on the prices of crops and their processed goods the NDRC data showed that 97 corn production fell 18%, spot prices rose in August-October, October corn prices than July rose 24%, and led the same time corn starch price uplift 11%.　　Although soybeans have also been affected and caused by the decline in yield per mu, but due to the growing area of growth, the total production has still been upgraded, the price basically remain unchanged, the same period of soybean oil prices are basically stable. June 98 Wheat Disaster, the 5 June spot average price than January-March down 5.6%, due to the state to regulate, the same period of flour prices rose slightly 2%; in August 98 waterlogging after the occurrence of the Chinese Indica rice prices rose 3.8%, one months after the rapid decline, but the same period rice and japonica prices rose 4-8%,　　And never fell back. After the frost weather broke out in Guangxi in late 99, sugar prices from the end of December 99 to 2000 yuan/ton climbed to the end of April 01 4350 yuan/ton (frost on the second annual output also has effect), 08 again after a large range of frost weather, the spot sugar price from the end of January 08 3400 Yuan/ton rose to February 3950 yuan/ton.　　ZCE futures prices also rose at the same time, the increase is basically consistent with spot price increases. As can be seen, the crop after the disaster of the first processing prices will rise, but the performance of crop prices are different. The prices of wheat and rice, which had been affected by the 98, were difficult to rally for a long time, and the country's lack of price-control varieties was prone to sharp price rises, such as corn, soybeans, cotton and sugar.　　If the country has a strong control of its price after the crop disaster, it will be difficult for growers in the disaster-stricken areas to benefit; first-time processing enterprises will usually benefit from the higher prices of the initial processing products; Meanwhile, the food and feed enterprises that purchase the first processing product will face the rising cost. The impact of this heavy rainfall and waterlogging on the current disaster: July 2, the rainy season in China began to appear a large range of heavy rain, mainly concentrated in Jianghuai Basin (Hubei, Hunan, Jiangxi, Anhui, Zhejiang) and northern Guangxi. Among them, the flood disaster occurred in Hubei, Hunan, Jiangxi and GuangxiHarm。　　As a result of the Ministry of Agriculture July 4 and July 5, only two batches of leaders led by the Secretary of the disaster relief team to Jiangxi, Hunan, Guangxi and other provinces to see the disaster, so the latest disaster is not known.　　According to the current situation reported by the media, the floods in Hubei, Hunan and Jiangxi are still less than the waterlogging of 98, but some areas of Guangxi in the flood disaster occurred in 20, fortunately, the morning of 5th, the peak has passed through Liuzhou. Future weather: China Meteorological Bureau Weather trend forecast for the next 10 days shows that the rainfall process of Jianghuai and South China is in 5-7 days and 7-9 days, after July 10, there are still scattered rainfall in the areas of South China, Huang Huai, Jianghuai and Hanjiang River.　　It can be seen that this large range of heavy rainfall lasted no more than a week. The growing period of major crops in the affected areas: 1 wheat has been basically harvested. 2 rice growing period: From early June to late July, China's main production of a season of rice in the nutrient-absorbing the most vigorous green tiller and jointing pregnancy spike, beginning in early August, the middle and lower reaches of the Yangtze River area Paddy gradually heading.　　3 Sugarcane growth period: from June to September sugarcane in the green jointing stage, October began to harvest into the squeeze. For both Paddy and sugarcane, the crops will continue to grow as long as the floods do not overwhelm the top for more than a week.　　If the disaster after the timely replenishment of chemical fertilizers and pesticides, yield per mu is basically unaffected. Output estimates and the impact on supply and demand: Referring to the 98 Yangtze River basin waterlogging, 03 yellow-Huai River basin waterlogging and 07 Huaihe Valley waterlogging, we expect to be affected by the waterlogging 09/10-crop rice production will reduce production by 1.4% (more than 98 reduction of 1% reduction in output.) The 2000-2003 reduction was not a significant reference, since there was a sell-off in inventories that weighed on food prices and caused the effect of shrinking acreage, which was 2.64 million tonnes. Pessimistic estimates will cut production by 4.4%; optimistic estimates will cut production by 0.7%.　　It is estimated that there are more than 110 million tons of rice inventory in the country, so even when the pessimistic situation occurs, China will not appear shortages. For sugarcane, this waterlogging mainly occurs in the Liujiang via Hechi, Liuzhou and in the next few days floods or the Guigang area will pass, according to the above three areas of production ratio, as well as the extent of disaster estimates, we expect Guangxi Sugar will yield only 0.4%, or 3.4 tons.　　Pessimistic estimate of 6.3 tons of production, optimism estimated to reduce production by 1.2 tons, the decrease is negligible. Judgment on the price of paddy and sugarcane: According to the experience of the 98 waterlogging, because of our strong control of rice prices, we expect the flood will be a short period of time to increase the price of rice slightly, and thereafter will be recalled; for sugar, because our country does not have the ability to control the sugar price completely, therefore, Short-term sugar spot and futures prices will be fried, but because of sugarcane and rice, not afraid of floods, and the flood submerged crops on the top of the time will not be more than a week, so the decline in sugar production is limited, sugar prices after speculation will also be recalled. Capital cityField response to the disaster weather reaction 07 years ago, the market was less concerned about agricultural stocks, and the stock price only reacted to the actual benefit or damage of the companies concerned after the disaster occurred. But 07 years later, affected by the Government's agriculture policy, the market is very concerned about the agricultural stocks, and the stock price is very sensitive to the related news. For example, when the snowstorm broke out in early 08, the stock prices of the related agricultural stocks were very hyperactive.　　In the 09, the three agricultural issues remain a concern, and, when the disaster occurred in the early processing of crops and sugar, and other crops are less controlled by the state price will rise, so the waterlogging this July is very likely to bring about abnormal volatility of the company's shares, resulting in short-term trading opportunities. This disaster may bring the industry and listed companies trading opportunities are: 1 prenatal Links: The beneficiary companies include the production of disaster relief equipment, agricultural machinery companies, after the disaster need to fill fertilizer companies, as well as to prevent the occurrence and spread of pesticide companies.　　2) Production Links: Rice growers in the disaster-stricken areas may benefit from limited benefits, but sugar companies with smaller government price controls may benefit more; 3 postpartum link: The first processing enterprises will benefit from the increase in product prices, but deep-processing enterprises will be impacted by the rising cost of raw materials. Among the listed agricultural companies we have covered, the listed companies that are likely to benefit from the disaster include: the Wilderness: benefiting from rising food prices.　　The company is in the northeast Sanjiang Plain less natural disasters, so rice and rice prices due to the disaster and the rise is likely to benefit the company. Nanning Sugar and Cofco Tun River: Benefiting from the rise in sugar prices.　　Because the sugar price by our government regulation is small, and the company is located in Nanning and the Northwest region, is not affected by floods in northern Guangxi and Jianghuai Basin, so the company will benefit from the increase in sugar prices. We have not covered the listed companies, Leo shares (water pump), petroleum chai (Diesel generator), Yang Nong Chemical (pesticide), Red Sun (pesticide), Nopsin (pesticide), Xin ' an shares (pesticides), superior chemical (pesticide), Jinjian rice Industry (rice, wheat and grease first processing, The province of Hunan, which is located in the affected region, may also have short-term trading opportunities.