Agricultural giant since 1983

Chapter 17 El Niño
"Go, let's go back and talk!" Hearing this, Xie Liren felt that it was inappropriate to continue talking about such a sensitive issue in this kind of place.

There are a lot of people around here, and it is easy to be heard. Although the mainland knows that there are not many futures traders at this time, what if?And maybe there are Xiangjiang people coming to eat nearby. Once the news is leaked, it will be bad.

Back to East Lake Liyuan, make some tea, and continue talking about the topic just now, "Xiao Li, what is your basis for judging that the price of palm oil in Malaysia will rise sharply?"

"Weather! The biggest factor affecting the price of agricultural products is weather and war. Last year, the super El Niño phenomenon occurred in the tropical Pacific region, which will inevitably have different effects on the precipitation in different parts of the world."

"Although the impact of each El Niño is different, the direction of the change in the region with a strong change in precipitation pattern is basically the same; the probability of drought in Southeast Asia, southeastern Australia, north-central Brazil, northeastern Africa and the Midwest of the United States is extremely high .”

El Niño comes from Spanish and means Holy Child. According to legend, a long time ago, the ancient Indians who lived along the coast of Peru and Ecuador paid great attention to the relationship between the ocean and the weather.

If around Christmas, the nearby sea water is warmer than usual, soon there will be heavy rain, accompanied by strange phenomena such as seabirds migrating in groups; the ancient Indians called this abnormal warm current out of superstition It is the "prodigy" trend, also known as the "El Nino phenomenon".

Modern meteorology uses this term to refer to the phenomenon of anomalous warming of sea surface temperatures extending westward from the west coast of South America (near Peru and Ecuador) through the equatorial Pacific Ocean to the date line.

Due to the high sea temperature, air stratification is unstable, and convection develops, the east coast of the equatorial Pacific Ocean changes from dry and rainy to rainy, causing flood disasters; while the west coast of the equatorial Pacific Ocean due to low sea temperature and stable air stratification, changes from humid and rainy to rainy. Dry and little rain.

The opposite is the La Niña phenomenon. When the southeast trade winds are abnormally strong, the seawater in the equatorial eastern Pacific will upturn abnormally and the precipitation will be abnormally low; while the seawater temperature in the equatorial western Pacific will be abnormally high and precipitation will be abnormally high.

Both phenomena are closely linked to global climate and can lead to increased odds of extreme weather.

"Palm trees are perennial rain-loving crops, which generally require an annual rainfall of 1300-2000 mm or more. When the monthly rainfall is 200-350 mm, the monthly output of palm oil is relatively high."

"April to October is the traditional rainy season in Southeast Asia. Abundant rainfall is conducive to the growth of palm oil. Once the rainfall generally decreases during this period, the yield of palm oil will inevitably decline."

It is precisely because the oil yield per unit area of ​​palm oil is directly related to the rainfall weather, so once the El Niño climate occurs, it will have a direct impact on the yield per unit area of ​​palm oil.

“According to our Chia Tai research, the El Nino phenomenon occurred in both 1977 and 1979, but the rainfall in Southeast Asia was not affected in the second year, and the price of palm oil did not fluctuate much. If we refer to the results of these two times, RM730/ The ton has reached its limit!" Xie Liren still couldn't believe it.

"More than two times, from 1951 to the present, there have been nine El Niño events in total, of which 1957 and 1965 were moderate El Niño events, which had a certain impact on palm oil production, with a median yield drop of 0.32 tons per hectare; The seven times were all weak El Niño events, with almost no impact." Li Lei was familiar with these data.

"But this time is different. This time it belongs to the super El Niño phenomenon, which has a great impact on the rainfall in Southeast Asia! Malaysian palm oil will inevitably face a substantial reduction in production!"

历史上马来和印尼曾发生过4次棕榈油产量大幅度减产，均发生在厄尔尼诺事件出现的年份，其中3次发生在超强厄尔尼诺事件年份，分别是1982-1983年、1997-1998年、2014-2016年，1次发生在中等厄尔尼诺事件的年份1986-1987年。

This year is the first production reduction caused by the super El Niño phenomenon. Because it has not happened before, it has not attracted the attention of relevant agencies. Otherwise, the price of palm oil is not just 730 ringgits.

"According to my estimates, the output of palm oil in Malaysia will drop by 5.00% this year, and the output in Southeast Asia will drop between [-]% and [-]%!"

"Mr. Xie, you have been engaged in the agricultural product industry for many years, and you must be aware of the strength of this data. If the supply of palm oil in the market is reduced by [-]%, the price will not only increase by [-]%, but will rise to [-]%. Two manufacturers can no longer afford palm oil for it!"

Li Lei clearly remembers the relevant data. From 1982 to 1983, the price of palm oil in Malaysia rose from RM650/ton to RM1750/ton in one go, an increase of 169%.

This is the severe shortage of agricultural products. Fortunately, palm oil is mainly used in food processing. If you switch to staple food and there is a [-]% shortage, it will be even more terrifying, and it will often rise to [-]% or even more. People can’t afford it Starvation will stop.

Why is Mr. Yuan respected by countless Chinese?Just because he firmly holds the rice bowl of the Chinese in his own hands, the Chinese no longer have to worry about not having enough to eat!

As for the guy who claims that Chinese people can buy grain from the international market, he is absolutely black-hearted. If he really does what he said, the international grain price will definitely rise to the sky. By then, I don’t know how many Chinese People will starve to death.

Of course, even at this level, he will definitely not be hungry, not only will he not be hungry, but he will also be praised and rewarded by his master.

"Mr. Xie, it is already May, and the flowering period of oil palm trees is coming soon. If you send someone to inspect Zhengda's own oil palm plantation, you will definitely find that there are fewer flower buds than in the past. As long as you can grasp this in advance According to the data, even if palm oil production in Southeast Asia is greatly reduced, CP Group can still obtain huge profits!"

This is another reason why the futures market price has not yet started to skyrocket. The oil palm trees have not bloomed yet, and the management of oil palm plantations is relatively rough, and no one has found the possibility of a substantial reduction in production.

The Chia Tai Group has a large area of ​​oil palm plantations in Southeast Asia, and the palm oil industry also plays a significant role within the group, so despite Xie Liren's doubts, he decided to follow Li Lei's approach.

How much does it cost to view buds?And once the possibility of a substantial reduction in production is discovered, how much benefit can it bring?This account is calculated by individuals.

"Just do as you said, tomorrow I will arrange someone to help you buy palm oil in the Malaysian futures market."

(End of this chapter)