Today is 05/25/2020

Daily Review on Meal Market in China

      Today (Jul. 24th), the market for meals in China is shown as follows:

      Soybean meal: U.S. soybean closed lower on Tuesday. Chinese government was said to allow five firms to start a first tranche of US soybean import of 2.2 mln tonnes without the existing tariff and the second tranche to foreign-owned and transnational enterprises. The two trances would include a total of 6.0 mln tonnes in these two tranches and must arrive at ports by the end of this year, and it would take about 20 working days to get the import license. But there is no official confirmation till now. Meal futures pare gains after lower opens on the Dalian Commodity Exchange today. Spot bids for soybean meal drop by 10-30 yuan/tonne with weaker trading. Specifically, the price settles at 2,740-2,780 yuan/tonne in coastal areas. (Tianjin 2,800, Shandong 2,750-2,770, Jiangsu 2,730-2,760, Dongguan 2,750-2,760, and Guangxi 2,750-2,770). While soybean import is huge in coming months, meal demand is still subject to the lingering African swine fever. And soybean meal itself is trapped in swelling inventory, especially in East China. And according to Bloomberg, Chinese and U.S. representatives will hold face-to-face trade talks from next Monday to Wednesday in Shanghai. Meal prices are thus depressed. But the weather speculation on U.S. soybean crop may make a comeback, and mills are still propping up prices; hence, there is limited space for price declines. Overall, short-term prices may follow futures to post narrow-range fluctuations, and buyers can stay on the sidelines or buy on immediate demand. 

      Imported rapeseed meal: Imported rapeseed meal declines in price today, of which it settles down by 10-20 yuan at 2,330-2,440 yuan/tonne in coastal areas. (Guangxi not offered; Guangdong 2,410, down 20; and Fujian 2,330). An increasing number of feed manufacturers supplant rapeseed meal and turn to soybean meal due to their largely narrow price spread. Moreover, domestic importers are buying more and more soybeans due to improved margins, and China will resume U.S. soybean purchases due to eased tensions, so soybean import is huge in the third quarter. In the meantime, the African swine fever, which still wreaks havoc in South China, Southwest China, and Hunan and Hubei, is sill a curb on meal demand. Therefore, rapeseed meal market is dragged down. But there is still uncertainties in the outcome of trade talks, and it is unlikely for China and Canada to settle their issues in a short time, so rapeseed supply will get tightened. And this is a support to rapeseed meal market. Overall, short-term rapeseed meal may fluctuate at a narrow range, and buyers can take hand-to-mouth buying. 

      Imported fishmeal: Imported fishmeal prices stay stable today with new product prices keeping firm and hoarded stockpiles having some negotiating space. Quotation at ports: it is priced steadily at 9,900-10,000 yuan/tonne for Peruvian Fair Average Quality SD with 65% protein content, 10,200-10,300 yuan/tonne for Thai SD with 67% protein content, 10,500-10,600 yuan/tonne for Japanese SD with 67% protein content and 10,900-11,200 yuan/tonne for super steam fishmeal with 68% protein content. Stocks at port: Huangpu 123,000 tonnes, Fuzhou 30,000 tonnes, Shanghai 80,000 tonnes, Tianjin 1,000 tonnes, Dalian 23,000 tonnes, Fangchenggang 1,000 tonnes and 4,000 tonnes at other ports. Spot price (FOB) steps down in foreign market today: it is down by 20 USD to 1,360 USD/tonne for Peruvian Fair Average Quality SD fishmeal with 65% protein content and also down by 20 USD to 1,560 USD/tonne for Prime SD fishmeal with 68% protein content. Chilean Fair Average Quality fishmeal with 65% protein content is 1,360 USD/tonne, and prime with 68% protein content at 1,590 USD/tonne. The demand for fishmeal is low from aquaculture and due to the African swine fever, and the market now has a total inventory of 261,000 tonnes with the import of new products from Peru. But holders are struggling to reduce losses under price inversions at home and abroad. Overall, fishmeal market is predicted to keep steady with slight declines in the short run.

      Cottonseed meal: Today cottonseed meal stays stable when operation rate keep at a low level amid no pressure from inventory; cottonseed price is high; mills are waiting for higher offers. However, cottonseed meal is dragged down by poor demand when African swine fever continues with recent frequent outbreak in South China, Southwest China, Hunan and Hubei province; the substitution of soybean meal for cottonseed meal happens in feed factory amid a narrowed price spread between soybean meal and cottonseed meal. Moreover, five Chinese crushers will likely get  the initial import quota of 2,200,000 tonnes soybeans with additional tariffs exemption, and the second quota may be 6,000,000 tonnes; top officials of China and US will make a face-to-face trade negotiation in Shanghai, China from next Monday to Wednesday. Today meals on DCE fall back with low open, and spot soybean meal decline 10-30 yuan/tonne. Short-term cottonseed meal is likely to fluctuate in narrow range. Buyers are suggested to take a hand-to-mouth buying strategy.

      (USD $1=CNY 6.88)