Homo sapiens

July 23, 2020.

The evening when massive downy mildew disease occurred on North American soybeans.

Britain.

London Exchange.

David looked at the market, and the prices of soybeans and soybean meal took off instantly. His hands were shaking. He no longer dared to place short orders:

"Quick, throw away all the short orders..."

"That's too late!"

In fact, ABCD had secretly informed David and others, but they were still a step too late. Today's offensive by the long forces in the market was like a dam bursting.

David, who was still answering the phone just now, watched the soybean and soybean meal futures prices on the market skyrocket.

In less than ten minutes, the price surged 2.3 times, and the upward trend has not stopped.

Other financial investment institutions and speculators, after a moment of astonishment, frantically used various connections to find out the news.

Soon the news that the soybean harvest in North America may be extinct this year was known to many institutions.

At this moment, these financial institutions and investors seemed to smell the smell of bloody sharks and piranhas, going crazy long on soybean and soybean meal futures, and even the futures prices of corn, wheat, and rice skyrocketed.

It seems that as a major international grain merchant, ABCD’s surge in soybean and grain prices this time seems to be very beneficial to them.

But in fact, ABCD was almost vomiting blood at this time.

Because they were liquidated.

Because there are too many highly leveraged short orders in soybean and soybean meal futures, the bottom line for price fluctuations is that soybeans can rise by up to 15%. Now soybean futures prices have soared to nearly 300%.

Don't they liquidate their positions? Who is liquidated?

Within ten minutes, ABCD lost tens of billions of dollars in the international futures market.

Cargill and Bunge suffered the heaviest losses.

What's even more frightening is that the delivery period of soybean futures will expire next month. Currently, there are 33.72 million tons of futures orders held in the futures market expiring in August and September.

No matter how futures prices fluctuate, ABCD must have soybeans and soybean meal delivered by then.

But the problem is that now North American soybeans are one of the regions with the largest production in the world, and the harvest has suddenly stopped. South American soybeans and Lucia soybeans have been booked by Chinese buyers.

When ABCD cannot deliver 33.72 million tons of soybeans and soybean meal, it will face a breach of contract.

For example, Luzon purchased 6.3 million tons of soybeans from ABCD through the channels of Xiangjiang and Xingdao, preparing to promote the diversification of edible oil and feed channels.

This transaction set a maximum liquidated damages of 1.3 times. At that time, the contract was US$330 per ton, and the total contract transaction volume was US$2.079 billion.

And this is a long-term contract, supplying 6.3 million tons per year for a total of 5 years.

If there is a breach of contract, ABCD will need to compensate nearly US$600 million this year.

In addition to this, Homo sapiens also used the vests of several European listed companies to place tens of millions of tons of orders with ABCD on the grounds of developing artificial meat, plant protein, feed and biofuels.

In other words, if ABCD cannot find enough soybean spot this time, they will not be able to gain much profit in the soybean spot market.

Financial markets are very real.

A group of international investment giants will not pay attention to the bleeding of ABCD. They only care about their own pockets and even wish that ABCD would continue to bleed.

The impact of the liquidation is that the futures prices of soybeans and grains have skyrocketed.

At the end of the day.

In the international futures market, the increases of various bulk agricultural commodities are very exaggerated. Soybeans increased by 327%, soybean meal increased by 272%, corn increased by 127%, wheat increased by 108.3%, and rice increased by 105.7%.

In the futures market, although ABCD reduced some of its losses through reverse operations, it still lost more than $13.5 billion that day.

David's Louis Dreyfus Company lost US$1.8 billion. He and the entire futures trading department employees fell into silence.

It's so tragic.

Louis Dreyfus's profits this year are estimated to be only over a billion US dollars. Today, this year's profits have evaporated.

"The company has held a board meeting, everyone, please be mentally prepared!" David said dejectedly.

…

If it is said that Louis Dreyfus has suffered heavy losses.

ADM, Cargill, and Bunge are all struggling.

After all, Louis Dreyfus has no soybean industry in North America and has just been ripped off in the financial market.

However, ADM, Cargill, and Bunge have a large number of soybean farms, oil pressing plants, feed mills, and plant protein extraction plants in North America.

The executives and boards of directors of the three companies held emergency meetings overnight.

Among them, Cargill, which is not listed, is better off. At least it does not need to explain the situation to stock market investors, but they also suffered heavy losses.

William Wallace Cargill, Jr., the chairman of Cargill, looked at President Wade, his eyes almost burning: "Tell me how much money we lost?"

"4...4.3 billion..." Vader's voice was trembling.

boom! Little William smashed his fist on the oak table, his face was like a piece of pig liver, and he roared crazily: "4.3 billion! What is the company's profit this year? In addition, the contracts in August and September have expired, how do you plan to solve it?"

"Chairman, there is nothing I can do. No one expected such a serious outbreak of soybean downy mildew to occur suddenly." Wade obviously did not want to take the blame.

William's face turned even redder: "I want to hear how you solve the problem and reduce losses, not your excuses, do you understand?"

All the executives were like ostriches, looking down at the documents in their hands, and no one had any idea of ​​making a sound.

No one here is a fool. With such a huge loss and production gap, they don’t know magic. Even if they replant now, it’s too late.

Cargill's soybean inventories in North America are 15.37 million tons and in South America are 12.39 million tons. These are all needed for delivery to customers or for the company's factories themselves.

Of course, there is another way now, which is to snap up soybeans from Eastern Europe and Lucia and use this part of the soybeans to deliver them to customers.

But now the spot price of soybeans has exceeded US$530 per ton. If you purchase at this price, you might as well just pay liquidated damages.

This is one of the reasons why the executives present did not dare to speak out. The problem is obvious: either purchase soybeans from other regions to fill the gap, or directly compensate customers for breach of contract.

Little William felt tired.

Suddenly, President Wade thought of an idea: "Chairman, maybe we can find supplements elsewhere."

"What can I do?" Little William asked quickly.

Wade explained: "Do you still remember the food war in Luzon? I estimate that the food inventory in Luzon will not exceed 5 million tons. Coupled with the continuous suppression in these two quarters, their domestic rice and corn planting areas have decreased. A lot, and now I feel like I can attack early.”

"Luzon? Food? Isn't it planned to launch next year?" Little William obviously knew the details of the plan.

Wade shook his head: "It's too late next year, and now the international rice price is out of control. Although the effect of starting early will be less, there is nothing we can do now!"

After thinking for a while, William also discovered the problem.

In the past, ABCD had maintained a low-price dumping strategy in order to suppress international rice prices, but now the soybean thunder has caused a chain reaction on the entire grain market.

After all, soybeans are an important raw material for edible oil and feed. Once prices soar, buyers will naturally look for alternative products.

This will in turn drive up the prices of rapeseed oil, sunflower oil, palm oil, corn, wheat and rice.

This invisibly undermined ABCD's low-price rice strategy.

If it is not launched now, with just a little guidance, Luzon's rice planting area will increase again, causing the previous layout to be in vain.

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