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Daily Review on Meal Market in China

2018-11-02 www.cofeed.com
      Today (Nov. 2nd), the market for meals in China is shown as follows:

      Soybean meal: US president Donald Trump tweeted that trade talks with Beijing were “moving along nicely”, after which US soybean surged overnight. But amid such trade war hopes, meals on the Dalian Commodity Exchange (DCE) are sealed at the decline limit today. And domestic soybean meal spots follow to fall and trade low. The decline is relatively small among oil mills as they are worried that mid-to-downstream companies may break contracts if the price falls below the deposit, but it is relatively large among traders for their panic selling climax. The price in coastal areas is 3,280-3,390 yuan/tonne, down 80-120 yuan/tonne from yesterday (Tianjin 3,290-3,300, Shandong 3,280-3,390 yuan/tonne, Jiangsu 3,250-3,390, Dongguan 3,350-3,390, Guangxi 3,350-3,400). Soybean supply gap may be far smaller than expected, for Chinese government has released standards to lower down protein content in animal feed and may dump million tonnes of soybean to targeting market, in addition that some South American oil mills are reselling their soybean to China. In the meantime, soybean meal spots have followed its futures to decline sharply, as its inventory has picked up again due to high operation rate in oil mills, its large price spread with mixed meals and the rampant African swine fever, and some oil mills in North China and Guangdong have had to stop or restrict production due to large inventories. On account of current fundamentals, soybean meal may have fallen within 3,000 yuan/tonne without the support from trade war, so soybean meal market responses drastically to trade news. But the push for settling trade conflicts prompted by US president is regarded as a pathway to?reverse unfavorable position in election on November 6th, and once the Republican wins, it may be a total different story later. Therefore, there are still uncertainties for later market, and buyers can just take hand-to-mouth basis and replenish upon steady falls.   
  
      Imported rapeseed meal: The price declines substantially today, of which it is 2,450-2,610 yuan/tonne in coastal areas, down by 70-100 yuan/tonne (Guangxi 2,580, down 20; Guangdong 2500, down 100; Zhangzhou Chintex, Fujian 2,610, down 10). Rapeseed meal market falls sharply on the back of soybean meal market, which can be contributed to weak demand from aquaculture and Chinese government’s new standards to lower down protein content in animal feed, as well as the frequent outbreaks of African swine fever. Market participants need to keep trade war under watch as the push for settling trade disputes by US president may be just asking more support for the mid-term election on November 6th. Buyers can just wait on the sidelines and replenish on the dips after steady declines. 

      Imported fishmeal: Price for fishmeal is stable today, with limited negotiating space and flat shipment at port. Northern ports: price is 10,500-10,600 yuan/tonne for Peruvian ordinary SD with 65% protein content, 11,400-11,600 yuan/tonne for Japanese SD with 67% protein content, and 11,500-11,700 yuan/tonne for super steam fishmeal with 68% protein content. Southern ports: price is 10,600 yuan/tonne for Peruvian ordinary SD with 65% protein content, 11,400 yuan/tonne for Japanese SD with 67% protein content, and 11,600 yuan/tonne for super steam fishmeal with 68% protein content. Stocks at port: Huangpu 60,000 tonnes, Fuzhou 38,000 tonnes, Shanghai 60,000 tonnes, Tianjin 1,000 tonnes, Dalian 10,000 tonnes, Fangchenggang 1,000 tonnes and 4,000 tonnes at other ports. Spot quotations (FOB) in foreign market keep stable: Peruvian ordinary SD fishmeal with 65% protein content is quoted at 1,330 USD/tonne, and 1,600 USD/tonne for super SD fishmeal with 68% protein content. Chilean ordinary fishmeal with 65% protein content is quoted at 1,510 USD/tonne, and prime with 68% protein content is 1,620 USD/tonne. While some have shown interests in shipment under growing inventory pressure, most holders are still waiting for news from Peru. In addition, there exists import pressure due to RMB devaluation; hence, fishmeal market will post very few changes in the short run.   
  
      Cottonseed meal: Meals on the DCE are sealed at the decline limit today in response to US president’s tweet for trade war hope. Due to a fall of soybean meal spots by 50-150 yuan/tonne and weak demand under the rampant ASF, cottonseed meal market is put into a bearish stance and is predicted to extend its downward trend in the short term. But its demand has picked up slightly amid its tight supply due to its price spread with soybean meal, so cottonseed meal market gets more resilient than soybean meal market. Few deals will be clinched as both buyers and sellers are waiting on the sidelines today.    

(USD $1=CNY 6.92)