Hong Kong Movies: You Hongxingzi, what the hell is the charity king?

Chapter 886 Domestic Side Story 5: Soybean Pricing Power, Showdown with the Four Major International Grain Traders! Grain Traders: Have I Become a Clown?!
On May 19, 2000, the University of Tokyo solemnly signed the agreement with the World Trade Organization (WTO), formally reaching a bilateral agreement.

On December 11, 2001, the University of Tokyo officially became the 143rd member of the World Trade Organization (WTO).

With the entry of the University of Tokyo into the market, the tide of the global economy began to impact the university's previously relatively closed-off state.

Vehicles, electronics, finance, food...

In this rolling wheel of history,
The soybean industry plays a crucial role in this.

Northeast China has always been a major soybean producing area.

Although soybean production in Northeast China has always been considerable, with the rapid development of the domestic economy and the gradual improvement of residents' living standards, the domestic demand for soybeans and their products is increasing day by day.

Soy milk, tofu, dried bean curd sticks, soy sauce, fermented black beans, fermented bean curd, soybean paste... and so on have become an indispensable part of people's daily lives.

In feed processing plants, soybeans, as a high-quality protein source, are used extensively in the production of livestock and poultry feed.

then,

The demand gap for soybeans is widening.

Then imports began.

The share of imports is increasing.

……

……

In early 2001, Guan Zu wrote an internal report entitled "Analysis and Suggestions on the International Shocks and Risk Prevention Faced by Key Industries in my country after Joining the WTO" and sent it to Beijing.

The internal reports cover industries such as automobiles, finance, electronics, and food, because after joining the WTO, they will face the impact of international dumping.

The internal reference mainly used the development history of soybeans in Argentina and Brazil as examples.

"In the late 1980s, Argentina was mired in a debt crisis and its domestic economy was weak."

"The four major U.S. grain traders (ADM, Bunge, Cargill, and Louis Dreyfus) joined forces with Monsanto (a U.S. seed giant) to gradually penetrate Argentina's soybean industry by using 'technical assistance and market commitments' as bait."

"The four major grain traders have pledged to buy Argentine soybeans, which will help farmers resolve their concerns about selling the produce and encourage them to expand their soybean planting area. Traditional pastures in the Pampas have been largely converted into soybean plantations."

"As soybean cultivation in Argentina expands, the four major grain traders, together with Monsanto, have launched genetically modified soybean seeds, claiming that their yield is more than 30% higher than that of traditional varieties. In order to quickly open up the market, Monsanto has adopted a 'let the fish grow' strategy: tacitly allowing local Argentine seed companies to imitate its genetically modified seeds at low prices, and even secretly supporting farmers to resell seeds through the black market, thus lowering the barriers to planting."

"In just five years, the proportion of genetically modified soybeans in Argentina's soybean planting area has soared from less than 5% to 99%. At the same time, the four major grain traders have adopted the 'agricultural input bundled sales' model, supplying fertilizers, pesticides and seeds in packages. If farmers choose their seeds, they can enjoy agricultural input credit discounts, further deepening their dependence on their supply chain."

"When Argentina's soybean industry became completely reliant on genetically modified seeds, the American seed company Monsanto suddenly launched an attack, demanding that the Argentine government collect patent fees from farmers growing genetically modified soybeans in the country on the grounds of 'patent infringement,' causing Argentina's soybean exports to Europe to plummet by 30%."

"At this time, the four major grain traders had already taken control of more than 80% of Argentina's soybean processing enterprises and storage facilities through acquisitions and mergers. They took the opportunity to stockpile large quantities of soybeans under the guise of 'guaranteed purchase price,' forcing farmers who were facing sales difficulties to accept their low-price terms. As a result, Argentina was reduced to a passive role of 'only producing raw materials and having no say in pricing.'"

"Brazil has experienced the same thing at this time, and it has now become a harvesting ground for the four major grain traders."

"At this time, the world's soybean production was as follows: the United States 6000 million tons, Brazil 5000 million tons, Argentina 3500 million tons, Southeast Asia 1000 million tons... India ranked fifth with 300 million tons..."

"The four major grain traders already account for 85% of the world's soybean production."

After the internal report clearly explained the global soybean landscape,

Begin analysis:
"As a country with 12 billion people, the four major grain traders will not let go of such a large market. They will inevitably take advantage of the opportunity of joining the WTO and launch an attack, following the methods of Argentina and Brazil..."

"Furthermore, apart from soybeans, other grains will remain the same..."

"Furthermore, the automotive, electronics, and finance industries at the University of Tokyo will also face similar challenges..."

……

After the internal report was sent to the capital,

A month later, in April 2001, China Grain Reserves Corporation (Sinograin) began to increase its soybean purchases from the United States, Brazil, and Argentina.

They pretended that there was a reduction in domestic soybean production and an expansion in demand, thus misleading the four major grain traders.

In reality, 60% is used for supply and 40% for storage, in preparation for future dumping wars.

……

……

Two and a half years later,
2003 year 7 month 15 day,
Chicago,
The conference room on the top floor of Cargill's headquarters.

Outside the floor-to-ceiling windows, the waters of Lake Michigan shimmered.

At either end of the long table sat key representatives of the four major grain traders, each with a "confidential" report on global soybean producing regions spread out in front of them.

Cargill CEO Alan Foster spoke first:
"The weather reports for North and South America are out, and this year is an absolute bumper year. The Midwestern United States has received ample rainfall, and soybeans in Brazil's Cerrado region are growing better than expected. It is conservatively estimated that the production of these three countries will increase by 15% compared to last year."

ADM Vice President Mark Hansen picked up his coffee cup.

"A bumper harvest is a good thing... but I hope that the four of us will not engage in a price war because of it."

"Yes, we can't engage in a price war."

"This will only hurt ourselves."

Cargill CEO: "This bumper harvest, we want to turn it into 'even better things'..."

"Everyone... I'm sure you're all very envious of that great power in the East, aren't you?"

“Since 2001, that large country in the East has significantly increased its demand for soybeans, and it imports them all from us. This is our opportunity.”

The other three smiled upon hearing this.

Too familiar!
Familiar territory!
Then, the Cargill president held up a report analyzing the soybean industry at Dongda University.

"Everyone has this document in front of them."

"After two years of investigation, Dongda now has more than 1,000 large and small crushing plants, and 80% of their raw materials are imported. Their enterprises are too scattered and have poor risk resistance, just like Argentina and Brazil back then."

“But East Asia is different from South America,” the vice president of Louis Dreyfus interjected. “Directly replicating and controlling the South American model would take too long. We need to break up their industrial chain first.”

ADM's vice president smiled slightly: "The way to break it down is simple—drive up the price."

"If the four of us join forces, we can take large long positions on the CBOT (Chicago Futures Market, the world's largest soybean trading market). At the same time, we can release information in conjunction with the U.S. Department of Agriculture, saying that U.S. soybean stocks may hit a 20-year low, thus driving up prices."

“Dongda Enterprise’s soybean raw material inventory certainly won’t last long. Once the price rises to a point where they can’t afford it anymore, they will come to us to buy goods.”

"The next crucial step is to force them to sign long-term supply contracts at a sufficiently high price."

“Once they sign long-term, high-priced contracts and the harvested soybeans hit the market, we’ll short them and drive the prices down. By then, they’ll definitely suffer heavy losses and their cash flow will be cut off.”

“Of the more than 1,000 factories, at least 70% will have to go bankrupt. Once their local businesses are bankrupt, we can acquire Dongda’s high-quality production capacity at low prices, just like we acquired Argentine oil refineries and controlled Brazilian logistics, and gradually take control of their industrial chain.”

The four of them were talking at once.

The air was filled with a joyful atmosphere.

They had long coveted the agricultural market of Dongda University, and this was the perfect opportunity to give Dongda a big piece of the pie.

quickly,

Four people opened champagne.

Alan Foster stood up, raised his glass: "To the harvest, and to the new 'territory'."

"cheers!"

"cheers!"

ding~~~
Four cups clinked gently in the center of the conference table, producing a crisp sound.

……

On the third day, in the evening...

The four major grain traders then invited the Secretary of the U.S. Department of Agriculture to dinner.

After hearing their plan, the minister quickly shook his head: "That won't do. Our Ministry of Agriculture still has authority worldwide..."

"My professional ethics wouldn't allow me to do such a thing!"

The four major grain traders: "We'll add more money!"

Minister: "Hehehe~~~ It's a pleasure working with you!"

shake hands!

A firm handshake!

……

Soon, it was August.

The U.S. Department of Agriculture suddenly announced that U.S. soybean stocks would fall to their lowest level in nearly 20 years due to severe weather.

As a highly authoritative institution in the global agricultural field, the U.S. Department of Agriculture's announcement of this "production reduction" quickly triggered widespread panic in the market regarding a soybean supply shortage.

The Chicago Board of Trade (CBOT) was the fastest to react.
It is the core venue for global soybean futures trading... well, the one from Dongda is the Dalian Commodity Exchange.

As news from the U.S. Department of Agriculture spread, Wall Street financial giants quickly seized this "business opportunity" and went on a buying spree of soybean futures contracts on the CBOT market.

The influx of large amounts of capital has driven soybean futures prices up rapidly.

Guan Zu had already instructed Li Jie, Xiao Fuji Mi Zai, and others to keep an eye on this matter. Leveraging their connections, they quickly entered the market and secured a large number of bullish contracts.

If you want to make money, I want to make money too.

Hehehe~~~~
……

The news quickly reached the University of Tokyo.

The futures market reacts the fastest.

Dongda-Dalian Commodity Exchange

"Opening bell! Opening bell!"

The traders stared at the screen, their fingers hovering over the keyboard.

At 9:00 AM sharp, the main soybean futures contract opened with a jump, soaring from yesterday's closing price of 2060 yuan/ton to 2110 yuan/ton. Within just ten minutes, the trading volume exceeded 100,000 lots.

"It's going up! It's going up even more!"

Someone shouted to add more orders, and the price curve on the screen shot up like a rocket.

Before noon, the price had already reached a high of 2400 yuan per ton, and many retail investors who followed the trend were making a fortune.

Buy more!

Buy more!

Buy more!

At this time,
The domestic physical goods trading market at Dongda University was also in complete chaos.

In Rizhao, Shandong, Wang Jianguo, the owner of a medium-sized oil pressing plant, held his mobile phone, his palms sweaty.

On the other end of the phone, the trader's voice was deliberately urgent: "Mr. Wang, place the order quickly! They say the inventory in the US is almost depleted, and prices will rise by at least 20% next month!"

A group of executives were sweating with anxiety.

"We only have enough raw materials for half a month left!"

"If you don't buy, the factory will have to stop production!"

"Order! Order five thousand tons first!"

At the same time, at the dock in Zhangjiagang, Jiangsu, purchasing managers from several large oil mills were arguing heatedly with representatives of international grain traders.

"Could you lower the price a bit more? This price is too high!"

"The price can't be lowered; it'll go up again if you order tomorrow!"

Ultimately, the factories gritted their teeth and signed high-priced purchase contracts for several thousand tons. ...

In the following week, the domestic soybean purchasing market was in a frenzy.

Traders' prices changed daily, rising from 2100 yuan per ton to 2300 yuan, and then to 2500 yuan, but this still couldn't stop the companies' buying frenzy.

Soybean companies couldn't fit them all in their warehouses, so some even rented temporary storage areas and stored soybeans in the open air.

Just then, a major piece of news came from Beijing:

China Grain Reserves Corporation (Sinograin) has launched the release of soybean reserves, with the first batch of 50 tons of soybeans supplied to the market at a price of 2100 yuan per ton.

"Has China Grain Reserves Corporation released grain into its reserves?"

Wang Jianguo was stunned when he saw the message after he had just paid the advance payment.

He quickly called the warehouse: "Could we postpone the delivery of that batch of soybeans we just ordered?"

However, the buying frenzy in the market did not stop immediately.

One business owner muttered, "China Grain Reserves Corporation's reserves won't last long. International grain traders have said that production will definitely decrease this year, so we need to stockpile more to feel at ease."

Thus, on one hand, China Grain Reserves Corporation (Sinograin) steadily releases 50 tons of reserve soybeans every week, and the price remains consistently in the range of 2100-2200 yuan.
On the other hand, many companies still hold the mentality of "the higher the price, the more they buy" and continue to purchase from the international market at high prices.

Two weeks later, strange things began to happen.

China Grain Reserves Corporation (Sinograin) seems to have inexhaustible reserves; even after releasing 300 million tons, soybeans continue to be continuously released into the market.

Over the past three years, they have stockpiled a considerable amount, enough to meet the domestic demand for soybeans for two years.

Meanwhile, those companies that rushed to stockpile goods are starting to worry:
The lease for the freight yard has expired, and renewing it will cost extra...

Soybeans are piled up in the open air to prevent them from getting damp from rain...

With tens of millions of dollars tied up in raw materials, the company's cash flow is starting to tighten...

They're having a tough time!

Crying without tears!

"Brother Liang, how much stock do you have?"

Those companies that didn't buy much soybeans began to feel at ease.

"I'm not buying anymore, I'll clear out my inventory first."

Meanwhile, the Dalian trading market was filled with lamentations.

The price of soybeans has fallen from a high of 2600 yuan to 2150 yuan.

"What's going on? Does China Grain Reserves Corporation really have that much stock?"

"Damn it, I placed so many orders!"

"I'm going to lose so much money, damn it!"

"Ahhhhhh~~~"

Some people panicked and started closing their long positions.

In the following days, soybean futures on the Dalian Commodity Exchange entered into a tug-of-war.

News of "production cuts" from the international market continued to stimulate bullish sentiment and drive prices to rebound;
Meanwhile, the continuous and stable release of reserves by China Grain Reserves Corporation (Sinograin) has boosted the confidence of short sellers and suppressed price increases.

In December, China Grain Reserves Corporation (Sinograin) released 800,000 tons of reserve soybeans at a price of 2000 yuan per ton, causing many futures contracts to be liquidated.

In addition,

China Grain Reserves Corporation (Sinograin) issued an announcement:

"The central government's soybean reserves are sufficient to fully meet domestic long-term consumption needs. The market is under control, and there is no need to panic."

"As the 'ballast stone' of national food security, China Grain Reserves Corporation (Sinograin) has the determination, capability, and resources to ensure the stable operation of the domestic soybean market. No external fluctuations can shake the solid foundation of my country's grain supply!"

This is a public announcement!

Once the action and announcement were issued,
The main soybean futures contract on the Dalian Commodity Exchange plummeted in response.

In the trading hall, many of the traders who had taken long positions were now in despair.

We suffered a huge loss this time!
No?

When did Brother Liang become so awesome?

I served it!
I will never speculate again!
……

……

At this time,
What about the US?
It's impossible for the actions of the University of Tokyo to cause any fluctuations, because the University of Tokyo's output is simply too low.

At this point, soybean prices in the futures market had soared from 540 cents per bushel in August (equivalent to RMB 2100 per ton) to 1060 cents per bushel in December (RMB 4400 per ton).

The increase was nearly 100%.

When Guan Zu saw that the situation at Dongda University was settled, he quickly told Li Jie, Jimmy, and the others to evacuate.

In the end, they made $30 billion.

Run away quickly.

No, I'll short again next time!
Eat it twice!
Jiejiejie~~~
……

……

December 15, 2003
Still Chicago,
It's still the Cargill headquarters.

The shimmering light of Lake Michigan outside the window was particularly dazzling.

Around the long table, the core representatives of the four major grain merchants gathered again, but the high spirits they had displayed during their secret meeting in July were gone.

"impossible!"

"Absolutely impossible!"

Their faces betrayed their barely concealed frustration and confusion!

"Why, why does that China Grain Reserves Corporation (Sinograin) have so many soybeans?!"

“We checked the data from the Ministry of Agriculture at Southeast University. Their total soybean production in 2002 was only over 1600 million tons. Although imports have increased in the past two years, it's impossible for them to have such a large reserve. Did they know about our plans in advance and secretly stockpile three years' worth of goods?”

"They also pegged the price to 2000 yuan per ton, which directly stifled the price increase in the Dongda Market!"

“We spent five months driving the price up from 540 cents to 1060 cents on the CBOT, an increase of almost 100%! We originally thought that Dongda Corporation would be scrambling to sign long-term, high-priced contracts like crazy, but what happened? They didn't buy it at all!”

"The problem lies in the reserves of China Grain Reserves Corporation!"

"No matter how much we speculate on CBOT, the Dongda market is completely unaffected—their production is low, but their reserves fill the gap!"

Amidst their confusion, there was also dissatisfaction.

They are like clowns trying their best to perform on stage.

"In any case, our plan has failed."

“Dongda University did not let us lead them by the nose like Argentina and Brazil did; instead, it caught us off guard with its reserves.”

The CEO of Cargill Group has defined the nature of the matter.

"If we continue to drag this out, we will be the only ones who suffer losses."

"So, this matter ends here..."

Sunlight streamed through the windows, illuminating the faces of the four people.

"What a despicable person from the University of Tokyo!"

"Yes!"

"So cunning!"

"What a born evil bastard!"

……

Soon, half a month later,
The U.S. Department of Agriculture suddenly changed its tune, releasing a revised report stating that its earlier estimates of soybean production were seriously flawed. In reality, U.S. soybean production not only did not decrease, but actually increased due to improved weather conditions, and major soybean-producing countries in South America, such as Brazil and Argentina, also had bumper harvests.

worldwide:"…………"

Damn it!
Meanwhile, Guan Zu had already instructed Li Jie, Xiao Fu, Jimi Zai, and others to quickly short soybean futures.

Other international futures traders rushed in.

Soybean prices plummeted in response.

In just two months, CBOT soybean futures prices have halved from a high of 4400 yuan per ton to around 2200 yuan per ton, returning to pre-surge levels.

When international agricultural organizations reviewed the situation, an unsolved mystery emerged: what were the four major grain traders and the U.S. Department of Agriculture up to?
What exactly is the conspiracy?
I thought and thought, but I just couldn't figure out the reason.

"The four major grain merchants are definitely plotting something, but we didn't even notice..."

"They are truly terrifying..."

Speculation is rampant around the world.

The four major grain traders: "emmm..."

……

……

In January 2019,

One message spread across the globe.

Dongda University and Brazil signed a 10-year soybean purchase agreement, stipulating that Dongda University will purchase no less than 1000 million tons of soybeans from Brazil each year.

The international agricultural products market has been directly shaken up!
When the news reached the ears of the four major grain traders (ADM, Bunge, Cargill, and Louis Dreyfus), they were so angry they vomited blood!

On the one hand, Dongda has obtained a stable and large-scale source of soybean supply, no longer restricted by the trade channels controlled by the four major grain traders;

On the other hand, with the Dongda market, Brazilian farmers and local traders are more willing to cooperate directly with Dongda.

No middlemen taking a cut!

It benefits both sides greatly!

Brazilian farmers are thrilled—damn it, they're finally free from being ripped off by the four major grain traders!
Dongda is awesome! — Damn it, with this 10-year buffer, I definitely have enough time to build a complete upstream and downstream soybean industry chain.

And what about the four major grain merchants?

Not only did it lose control over the pricing of soybeans from Dongda, but it also lost control over soybean production areas in Brazil.

They also lost the power to set global soybean prices!
Spit blood!

"Damn Todai!"

"Was this also part of your plan? Ahh ...

……

……

With the soybean pricing power incident,
Domestically, more attention is being paid to Guan Zu's internal report.

Therefore, China made advance arrangements for other grain reserves, while increasing subsidies for technological research and development in industries such as automobiles and electronics, to prevent those companies from accelerating cooperation with foreign countries in order to expand, forgetting their own technological accumulation, and ultimately being controlled by foreign capital.

--------

P.S.: That's all for today. (Just wondering, should the protagonist change his identity and become a Republican, stirring up trouble behind the scenes? I think a behind-the-scenes story would be more suitable.)
(End of this chapter)