Chapter 349: An Era That Doesn't Believe in Tears; The Change of the River

On August 8, the USDA report finally came out.

Chen Yanqiu, director of international trade of Jiahe Grain and Oil, who had been paying close attention to the developments in the United States, immediately relayed the news to Guo Yang and Gao De.

Last year, the total grain production in the United States decreased by about 15%, but still reached about 3.9 million tons.

This year, the production figure has dropped by about 5% again, with a total output of 3.705 million tons.

This figure is actually within the expectations of industry analysts, and the fluctuation range is also within the normal range.

However, the USDA significantly lowered the ending stocks of grains such as soybeans, corn, and wheat.

At the same time, it also gave its first forecast on the supply and demand situation of old American soybeans in 2008/2009, setting the tone for the relatively tight supply and demand of old wheat and soybeans this year.

The decline in production is the main factor causing the reduction in ending inventory. Due to the impact of GM-resistant weeds and red imported fire ants, the USDA expects annual U.S. soybean production to be 6000 million tons, a decrease of 5% from last year and a decrease of more than million tons from the peak two years ago.

The situation for corn is even more alarming, with production of only 2.2 million tons, a drop of more than 5 million tons compared to two years ago.

But what is even more intriguing is that while lowering its production forecast, the USDA also raised the demand for U.S. soybeans, citing global energy shortages and the trend of rapid development of bioenergy, which will not change, and believes that the global export market is booming.

"Now everyone with eyes knows that the economy is weak and demand is sluggish... This USDA report has surprised most analysts!"

There is no doubt that this report is bullish, which is in stark contrast to the current situation in the market where bears have the upper hand.

"Before this report, many people at home and abroad speculated that the USDA would increase soybean ending stocks due to weak demand, but the opposite happened. Are the genetically modified weeds and red fire ants in North American production areas really that powerful?"

"In theory, even if the production is reduced, it is still a major grain producer in the world, and domestic grain production is also increasing, which can completely offset the reduction in the United States..."

Guo Yang interrupted Gao De's analysis and said, "Don't analyze it. This is good for Jiahe anyway."

International food prices remain high, and the price of imported soybeans is higher than that of domestic soybeans.

The balance of the price war has tilted towards Golden Harvest.

"Just wondering..."

"Maybe it's still the weeds and fire ants." Guo Yang said, "I'm going back to Jiuquan. Where are you going next?"

"Northeast, go check the situation in the soybean producing areas."

Gao De asked, "Boss, aren't you going to stay in Beijing to watch the opening ceremony of the Olympics?"

"No, I'm not thinking about that. I'll just follow up with Chen Yanqiu. The shipping and shipping agency will depend on the next few months."

"Aqiu is still at ease when doing things."

Guo Yang nodded, thought for a while, and said, "In addition, the layout of grain and oil processing in third- and fourth-tier cities should be accelerated. Yihai Kerry is faster than us in this regard."

"Well, that's the foundation laid by Yihai Grain and Oil."

“There are also holdings and investments in railway logistics.”

"Ah."

"We need to push for more R&D and overseas sales channels."

"..."

...

The USDA supply and demand report has caused a stir both at home and abroad.

This was reflected in the market as CBOT futures prices rebounded strongly for a while, then died down and remained at a temporary stalemate.

This is not good news for grain import and export traders targeting the Chinese market.

In the past two days, domestic traders and processing company owners who use imported soybeans as raw materials are all frowning.

At a real estate project launch conference in Yanjiao, a provocative reporter asked Shi Kerong a question.

"Boss Shi, Huifu Grain and Oil's operating rate is less than 50%. Will you focus on the development of the real estate market in the future?"

"Is Huifu Grain and Oil going to fail? Will it stop production altogether?"

“Will this brand disappear?”

After these three questions, Shi Kerong, who was originally happy to sell the house, suddenly turned pale.

This stung him where it hurt.

If the brick factory was his first pot of gold, then Huifu Grain and Oil was where he really started out.

The current situation is indeed extremely bad.

Another company in the same difficult situation as Huifu is Zhizhiyuan, whose oil and fat factories are severely under-utilized, suffering from customer loss and a lack of confidence among management.

Chairman Guo Bochun often appears in other business units under the company and rarely shows up at the oil and fat factory.

There are many companies like Huifu and Zhizhiyuan in coastal areas, and the coldness of the financial crisis has settled in advance.

The National Grain and Oil Information Center felt that this cold wave was not strong enough, so it adjusted the cold wind level to the maximum.

Following the USDA, the National Grain and Oils Information Center released this year's soybean production forecast.

Total annual soybean production is estimated at 4400 million tons, compared with 3000 million tons in the previous year.

Production has increased by more than 1000 million tons for two consecutive years.

However, last year's increase in production was due to an increase in yield per unit area, while this year's increase in production was largely due to adjustments in the planting structure.

Last year, domestic corn production exceeded demand by 1 million tons, and this year a large number of farmers switched to growing soybeans.

The soybean planting area increased from 1.35 million mu last year to 2.05 million mu, a significant increase of 7000 million mu.

In contrast, yields increased only slightly.

As soon as this report, which was also carefully awaited, was released, it almost announced the counterattack of domestic soybeans.

全年大豆消费量预估在5100~5200万吨，自给率达到85%，比去年的60%再度提升了25个百分点。

In the first half of the year, China's soybean imports from South America had already exceeded 700 million tons.

It is certain that there will be an oversupply of domestic soybeans in the second half of the year.

What's left is a price war.

However, the Americans do not want to lower the prices, while the domestic market is full of confidence. This has almost determined the result in advance.

The editor-in-chief of Grain and Oil Market News summed it up in one sentence.

"The frost-free period of the edible oil market has ended, and another era of not believing in tears has begun."

……

North America.

USDA has a total of seven deputy secretaries in charge of specific affairs, one permanent deputy secretary, and one secretary.

Freya Carey is one of seven deputy ministers, responsible for farms and overseas agricultural services.

It has three departments under it: Farm Service Agency, Foreign Agricultural Service, and Risk Management Agency.

It can be said that all the bad things that have happened in federal agriculture in the past year or so have passed through Freya Kelly.

"Yes, yes, Minister, the subsidies to farmers this year will definitely arrive in time."

"What? More aid?"

"The president promised the voters? But there is no budget for it. Let's think of a solution. There is no other way!"

Hearing the busy tone on the phone, Freya Kelly couldn't help but spit sweet words.

"Fuck!"

"Fuck! All these farmers do is protest and cause trouble. Can protest and cause trouble solve the weeds on the farm?"

Why did the USDA delay releasing the report?

It’s because the domestic situation is not very good.

Not only did the total output and yield per unit area drop again, but the massive spread of weeds significantly increased production costs, which was the most fatal thing.

Roundup herbicide cannot kill the mutant species of Tribulus terrestris, but if weeds are not removed, the yield per unit area will drop significantly.

As for weeding, the only way is to use mechanical tillage and other methods. Compared with spraying herbicides, the cost is much higher.

Faced with this dilemma, the only option is to increase subsidies for agricultural products in disguise.

But subsidies cannot be given casually. Not only will they be subject to pressure from the WTO, but also from considerable economic pressure.

In this case, the lower food prices fall, the greater the pressure on federal agricultural products.

It's not just exports. Because of rising costs, agricultural products from other countries may impact China's domestic market.

Although the total agricultural output of the Federation has been affected, it remains one of the world's major food exporters.

Just as Freya Kelly was stunned, Hampton from the Farm Service Agency hurried in.

"Hey, we're in trouble again, with violent protests by alfalfa farmers in California and Arizona."

"Dodder is spreading in pastures, the quality of alfalfa has declined, and there is no competitive advantage in the export market. Domestic sales have also caused great damage to the livestock industry..."

After listening for a while, before Freya Kelly could catch her breath, Michael Hall from the Risk Management Department walked in again.

"I have some bad news too. Scientists don't have a good way to deal with super weeds and red fire ants."

"Shit!" Freya Kelly cursed, "Is there no good news?"

Both subordinates remained silent.

Where does the good news come from?

In the past six months, there has been only one piece of bad news, worse than the last.

Freya Kelly also tried to give up, but it was the critical period of the election, and any slight mistake would be magnified infinitely.

After thinking about it, Freya Carey called ADM President and CEO Patricia Wools.

Patricia Wools was the CEO of Chevron, a leading global energy company. After joining ADM, she was named one of the top ten most influential business women in the world.

It is the first promoter of ADM's bioenergy strategy.

Wurth's brisk voice came, "Hey, Minister Kelly, is there any good news?"

"No, Wools." Kelly sighed, "The situation has not improved. I want to hear ADM's thoughts."

After a pause, Wools said, "ADM's investment in bioenergy will continue."

It's gone?
Freya asked, "What about the sharp drop in crude oil prices?"

“Aren’t there also federal energy subsidies?”

"..."

"What about ADM's export trade in China?"

"Maybe you should ask Cargill and Bunge." Wurst was silent for a while, then said, "ADM has established close cooperation with China's largest grain and oil company. China's grain production has exploded. If China does not introduce more effective subsidies, ADM will simply change its investment direction."

Freya had a bad feeling, "What do you mean?"

"The Chinese market now not only has consumption potential, but also strong production capacity. ADM is considering increasing its investment in China."

Freya chuckled and said, "Okay, good luck to you then."

Wurst's nonchalant attitude made Freya feel like she was punching cotton.

On the other side, after hanging up the phone, Wuls was not as relaxed as Freya had imagined.

ADM is headquartered in North America and its main business is also in North America.

It is the largest soybean crushing plant, the largest corn additive manufacturer, and the second largest flour mill in the United States.

Two consecutive years of federal production cuts have significantly affected ADM's operating performance.

Corn production in particular has dropped by 5000 million tons in two years, which has not only affected ADM's bioenergy strategy, but also cut its export trade in half.

The United States' excess corn production was only over 1 million tons, but now it has been reduced by nearly half, which is really a headache.

As for the investment in China...ADM has already invested a lot of money.

It's just that the trading link is broken. ADM has 13000 railway carriages, 2250 barges and 1200 container trucks around the world, but its acquisition channels in China are very poor.

"It is true that the success or failure is due to the national grain..."

Wools looked through the investments in China.

ADM has invested hundreds of millions of dollars in its cooperation with Guoliang alone.

China National Grain and Oils Corporation, ADM and Wilmar jointly invested to establish Shanghai Fortune Food Co., Ltd.

Guoliang has five major refined edible oil production bases.

The "Beihai" in Tianjin, the "Yellow Sea" in Shandong Province, the "East China Sea" in Zhangjiagang, the "Dongzhou" in Pengcheng, and the "Dahai" under construction in Guangxi Province.

This coastal layout is designed for one-time purchase and unloading along the way, which translates into an advantage in purchasing costs.

However, ADM only holds 20% to 30% of the shares in each base, but has a lot of say in purchasing.

China's soybean processing industry is just one link in ADM's process of realizing profits from international trade.

In addition, ADM's shares in Wilmar Group have been transferred, but ADM is still a shareholder of Wilmar International.

But the focus is still on trade...

Although it has strong processing and R&D capabilities, it only has one wholly-owned premix company in China: ADM Animal Health and Nutrition (Dalian).

But now the trade is almost unsustainable.

The national grain price is rebounding...the bigger the price difference, the greater the rebound.

Wilmar International also has a lot of shares in inland China, but ADM only holds shares indirectly.

After thinking for a while, Wurst called his assistant and said, "Please help me make an appointment with Huaxia Guoliang Group."

The assistant asked, "In the name of what?"

"ADM has agreed to invest and continue the cooperation." Wurst thought for a moment and said, "Please help me make an appointment with Guo Guangfeng from Wilmar."

"OK." The assistant said again: "But are we really not going to respond to the shareholders?"

Since the beginning of the year, Archer Daniels Midland (ADM)'s performance in the stock market has been declining, and its market value has evaporated by tens of billions of US dollars compared to its peak.

"Do you have any idea?"

Faced with Wools's glare, the assistant could only turn around and walk away in disappointment.

After closing the door, you can still vaguely hear the sound of banging on the table coming from inside the office.

This old woman has such a bad temper!

Alas, it seems the third quarter report is over!
……

Tuesday, May 8th.

As the Olympic Games approached, delegations from various countries arrived one after another, and the whole country's attention was attracted to the capital.

Guo Yang has returned to Jiuquan in a low-key manner for two days. In addition to maintaining a close focus on Jiahe Grain and Oil, he has also devoted some energy to handling the business of other branches.

Basically every day is spent in meetings, listening to reports and issuing work instructions.

I just resumed exercising in the evening.

As it is the Olympics, the enthusiasm of the whole nation for sports is also high. The ecological park by the river is crowded with people who come to play and exercise.

The rich and diverse vegetation on the river bank and in the park attracted many citizens to stop.

The water of Taolai River is crystal clear, like a mirror, with picturesque reflections, and the houses on both sides are arranged in an orderly manner.

Whether it is the pedestrians who stop to watch or the water birds that occasionally fly over the river, they are all infected by this peaceful scene. The whole environment is filled with tranquility and harmony.

"The environment of the Taolai River has changed very quickly in the past two years. Even the depth of the river has increased a lot."

"That's right. Why don't you ask how much money was spent? The housing prices in the riverside communities are rising even faster now!"

"I heard that Jiahe has contributed a lot."

"Hey, this was all facilitated by Jiahe. Jiuquan plans to build a global headquarters economy around Jiahe, so the environment must be improved."

"That's right. It won't be embarrassing when foreigners come here. My daughter told me that foreigners are very particular about these things. They say the Rhine and Seine rivers are very clean."

Guo Yang, who was resting nearby, couldn't help but reveal a strange expression when he heard this.

Both rivers are extremely polluted.

The Seine River is even known as the Ganges of Europe. It is full of humanistic feelings, but its natural environment is extremely embarrassing.

Not to mention the comparison with the Beida River after the treatment, even the Beida River before the treatment was much cleaner than the Seine River.

However, at this time, Chinese people still do not understand Europe and the United States, and still look at various things through filters.

That’s why we have such a grand Olympic Games.

After exercising for a while, Guo Yang strolled back home. Along the way, he met many employees who greeted him.

Some of the first batch of employees allocated housing in Jiahe Village have already moved in. The community is close to the river and they are enjoying the benefits brought by watershed management.

Guo Yang has seen the report photos in the work group.

Both sides of the steep canyon of Jingtie Mountain in the upper reaches are sprayed with cold-resistant forage grasses such as needle fern, ice wolf grass, and purple arrow pea.

Plants such as ramie and sea buckthorn also grow on both sides of the river.

The main stream of Taolai River is mostly Gobi Desert. Except for the land for long-term planning, both sides of the river are basically Jiahe's "Gobi Agricultural Area".

The landscape dominated by sea buckthorn and ramie has brightened up the entire Gobi Desert.

The tree, shrub and grass communities on the shore block the sandstorms from the Gobi Desert, creating a more suitable microclimate.

The wetland plant communities growing along the water's shoreline are able to adapt to the fluctuations of the water surface and ensure the ecological foundation of the river in both dry and wet seasons.

Below the normal water level there are particularly important aquatic plants, which are part of the river's biological community and play a role in purifying the water.

The longer the three develop and evolve in a coordinated manner, the better the overall environment of Taolai River will be.

Then it will attract animal communities to reproduce and live here, thereby promoting the development of the entire river habitat, and ultimately achieving the fundamental goal of water ecological environment management.

In the river sections that pass through the city, the natural restoration capacity of the riverside green space is enhanced through the creation of waterfront wetland ecological landscapes.

The governance plan is fine.

The only surprising thing is that the river’s natural ecological restoration ability is too fast.

But this place is closer to Jiayuguan, and in terms of ecological environment governance, Jiayuguan has always been several blocks ahead of Jiuquan.

Even if there was Jiahe in Jiuquan, it could not change the outcome.

Jiayuguan can also leverage Jiahe.

"That's fast enough. If we don't compete with Jiayuguan, we'll be a bunch of lunatics, as if we can't be satisfied unless we beat Jiuquan."

The next day, when Guo Yang and Qin Lijun inspected the ecological management results of Beida River together, Qin Lijun was very satisfied with the current situation.

"Hey, Boss Guo, you've been traveling around the country a lot in the past six months. I wonder how satisfied the citizens are with the Beida River now? There are a lot of people walking along the riverside path every day."

"I saw it yesterday." Guo Yang said with a smile, "But the few plots of land left by the city near Nanbinhe West Road have not been developed yet and are still wasteland."

“Jinyu Park is a little better, but the surrounding area is also just a rough draft.”

"..."

After thinking for a while, Qin Lijun complained.

"The plots of land south of Binhe West Road are reserved for the construction of resettlement housing, but the city's finances cannot be turned over, so it will take a few years. This is a long-term plan."

Guo Yang said: "Can we find a way to reforest it first? It's not pleasant to look at the desert wasteland all the time."

"Where did the money come from?"

“This is also part of watershed management.”

"What does this have to do with anything?"

Guo Yang said confidently: "Look, the main source of water for the Taolai River runoff is not only melting ice and snow and atmospheric precipitation, but also groundwater."

"Especially in late winter and early spring, when some rivers freeze over, groundwater becomes the main source of replenishment, and surface ecology is very important at this time."

Qin Lijun: "That's true, but I don't have the money."

"The city has been emptied of money this year for the sewage treatment plant, the Beida River treatment, two parks, subsidies for water-saving fallow in the Shule River basin, and other infrastructure."

"What about next year?" Guo Yang said, "It's not complicated at all. Just dig a shallow trench and sow the seeds."

"What about giving it to Muhe?"

"Don't you have no money?"

"I'll owe you the money first." Qin Lijun said, "Are you afraid that I won't pay you?"

"..."

Guo Yang was silent. If it was fifteen years later, I would really be afraid that you would owe me the money and not pay it back.

"Okay, then we don't need to dig trenches, we can just sow some seeds directly."

Qin Lijun: “…”

Qin Lijun didn't want to dwell on this issue, so he changed the subject and asked about Jiahe Grain and Oil, which had frequently appeared in financial news recently.

Nothing else, just curiosity.

After all, with such a massive competition, coupled with a decline in global economic expectations, even Jiuquan has felt the chill, and more migrant workers have returned home early.

Guo Yang briefly talked about Jiahe’s strategy and the domestic competitive situation.

In addition to Wilmar International's early layout in third- and fourth-tier cities, Guo Yang tactically despised other competitors one by one.

"Leader, the advantage is mine."

"What you need to consider now is to strive for more railway planning, and then try to start construction earlier and complete it earlier."

Qin Lijun actually started thinking about it.

In fact, Guo Yang is not as relaxed as he seems. He still feels some pressure, just a little bit.

Taking the lead in strategy is also important in execution.

International grain traders are not stupid. Although the route of exporting to China has been cut off, importing from China and then exporting to other parts of the world is also a way.

Moreover, except for ADM and Marubeni, other international grain traders such as Cargill, Louis Dreyfus and Bunge all have a certain foundation in China.

For example, Louis Dreyfus, a company that is good at trade, sells corn from the Northeast and Northwest to the South and Southwest, and is also the largest cotton exporter to China.

In the past, domestic wheat, rice, sugar and livestock product export business was mainly carried out in cooperation with Louis Dreyfus.

In addition, Louis Dreyfus’ oil and fat processing capabilities in coastal areas are also strong.

Louis Dreyfus is like a catfish, engaging in trade, processing and all kinds of business.

Even Jiahe and Jiusan’s organic soybeans and soy products are sold to Europe through Louis Dreyfus.

Cargill is no less impressive.

In addition to its main grain exports and oil processing, Cargill also has certain competitiveness in animal nutrition, commonly known as feed.

However, Cargill has always been engaged in B2B, and its feed competitor is New Hope, whose market share is less than 1%.

After analysis, it is found that these grain traders have had their export trade disrupted, but their processing capacity remains.

As long as we focus on processing domestic soybeans and invest in domestic logistics, storage and trade, we can survive.

Only ADM is about to turn against the national grain, and it has lost its export trade. The real investment is seriously insufficient... It is also the number one hitter of American bioenergy investment.

Guo Yang watched the crude oil futures price fall to $115, and was delighted at both ADM's predicament and the profits from futures.

At the same time, there are also concerns about whether the coal bosses will turn against us.

(End of this chapter)