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Daily Review on Meal Market in China--26/07/2019

Today (Jul. 26th), the market for meals in China is shown as follows:

Soybean meal: U.S. soybean futures slipped in overnight trading due to weak exports, and meal futures follow to decline on the Dalian Commodity Exchange today as China has resumed U.S. soybean purchases with four cargoes on Tuesday and Wednesday. Spot bids for soybean meal fall by 10-30 yuan/tonne with tepid trading. Specifically, the price settles at 2,740-2,790 yuan/tonne in coastal areas. (Tianjin 2,790, Shandong 2,750-2,780, Jiangsu 2,740-2,760, Dongguan 2,720-2,760, and Guangxi 2,750-2,770). Chinese government was said to approve some 6 mln tonnes of import quotas in two tranches for U.S. soybeans free of the additional tariff for crushing enterprises, which will enlarge soybean arrivals at port later, and soybean import has already been predicted to reach 28 mln tonne in the third quarter. Soybean meal is still in gloomy demand with swelling inventory due to the African swine fever, which is relatively more severe in South China. Besides, U.S.-China trade talks will be held in Shanghai on next Tuesday and Wednesday. And Chinese officials have approved the purchases of corn, cotton, sorghum and pork with tariff exemptions from the United States, according to Bloomberg. These are all negative to meal prices and have broken the upward trend in the previous day. But the weather speculation on U.S. soybean may come back at any time, and this helps keep a lid on the price declines of soybean meal to fluctuate narrowly and frequently on the back of futures in the near term. Buyers can wait for low and stable prices to make proper replenishment on the dips. 

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 Standard 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 SD with 68% protein content. Stocks at port: Huangpu 125,000 tonnes, Fuzhou 30,000 tonnes, Shanghai 85,000 tonnes, Tianjin 1,000 tonnes, Dalian 23,000 tonnes, Fangchenggang 1,000 tonnes and 4,000 tonnes at other ports. Spot price from foreign merchants remains unchanged today: it is 1,360 USD/tonne for Peruvian Standard SD with 65% protein content and 1,560 USD/tonne for super SD with 68% protein content. Chilean Standard SD with 65% protein content is 1,360 USD/tonne, and super SD with 68% protein content at 1,590 USD/tonne. The consumption on fishmeal is limited by the demand from aquaculture and reducing breeding pig amount under the African swine fever. Meanwhile, with constant arrival of new fishmeal from Peru, the total inventory has climbed higher to 269,000 tonnes, with an increase of 103.61% from the corresponding period last year. Hence, fishmeal market is negative. 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.

Imported rapeseed meal: Imported rapeseed meal declines in price today, of which it settles down 20-40 yuan at 2,300-2,410 yuan/tonne in coastal areas. (Guangxi not offered; Guangdong 2,370, down 30; and Fujian 2,300, down 40). Buyers are prudent about rapeseed meal purchase. Rapeseed meal demand is now severely influenced by its largely narrowed price spread with soybean meal. Besides, the impact by the African swine fever will hover for a while expectantly in South China, and soybean import is huge later.  However, rapeseed supply is getting tightened as it is difficult for China and Canada to settle their issues in a short time, and the weather speculation on U.S. soybean crop may make a comeback at any time; hence, the downside potential of rapeseed meal are restricted. Buyers for the present can wait and make proper replenishment when prices go stable.

Cottonseed meal: Today cottonseed meal stays stable when operation rate keep at a low level amid no pressure from inventory; there are still some rigid demands in downstream. However, the overall demand is not good due to African swine fever and the narrow price spread between soybean meal and cottonseed oil. Besides, today meals on DCE decline and spot soybean meal drop 10-30 yuan/tonne when China re-purchases US soybeans and US sorghum, corn, and hog are exempted from additional tariffs. Short-term cottonseed meal is likely to mainly fluctuate in narrow range. Buyers are suggested to take a hand-to-mouth buying strategy or stay on the sideline for the present, and wait for the result of Shanghai trade talks next Tuesday and Wednesday.

(USD $1=CNY 6.87)