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Daily Review on Meal Market in China--29/07/2019

Today (Jul. 29th), the market for meals in China is shown as follows:

Soybean meal: U.S. soybean futures edged higher last Friday on hopes for U.S.-China trade thaw as representatives from both countries would hold economic and trade consultation negotiations in Shanghai this Tuesday and Wednesday, but meal futures inch lower on the Dalian Commodity Exchange today as this news is bearish to domestic market. Spot bids for soybean meal fall by 10-20 yuan/tonne with tepid trading. Specifically, the price settles at 2,730-2,790 yuan/tonne in coastal areas. (Tianjin 2,790, Shandong 2,740-2,780, Jiangsu 2,730-2,760, Dongguan 2,730-2,750, and Guangxi 2,750-2,770). China will eliminated the additional tariffs on such U.S. agricultural product imports as soybean, cotton, pork, sorghum, wheat and corn, as well other diary products. While soybean takes on a huge import outlook, soybean meal is still in gloomy demand with swelling inventory due to the African swine fever, which is relatively most severe in South China. Meal prices have thus posted declines. But the weather speculation on U.S. soybean may come back at any time, and there is little probability for a trade deal in this round of trade talks; hence, soybean meal prices will have little downside space as mills are propping up prices. Overall, short-term prices may maintain narrow fluctuations to adjust. Participants can pay close attention to the outcome of trade talks, and buyers can wait for low and stable prices to make proper replenishment on the dips. 

Imported fishmeal: Imported fishmeal prices stay stable with some declines today, and there is price gap between new and old fishmeal. 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 lower by 100 yuan at 10,800-11,200 yuan/tonne for super SD with 68% protein content. Stocks at port: Huangpu 127,000 tonnes, Fuzhou 31,000 tonnes, Shanghai 82,000 tonnes, Tianjin 1,000 tonnes, Dalian 23,000 tonnes, Fangchenggang 1,000 tonnes and 4,000 tonnes at other ports. Peruvian merchants have quoted lower today as they somewhat rush to quicken their deliveries: it is down by 20 USD at 1,340 USD/tonne for Peruvian Standard SD with 65% protein content and also down by 20 USD at 1,540 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 104.07% from the corresponding period last year. Hence, fishmeal market is negative. Overall, fishmeal market is predicted to keep steady with slight declines in the short run.

Cottonseed meal: Cottonseed meal prices today are partially stable, and partially strongly fluctuate 20-100 yuan/tonne, when operation rate keep at a low level amid low level of 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 slip and spot soybean meal is stable with a decline of 10-20 yuan/tonne when the news of trade tension easing is negative to China's market. Short-term cottonseed meal is likely to mainly fluctuate in narrow range. Buyers are suggested to take a hand-to-mouth buying strategy, and wait for the result of Shanghai trade talks.

Imported rapeseed meal: Imported rapeseed meal increase in price today, of which it settles up 10-20 yuan at 2330-2430 yuan/tonne in coastal areas. (Guangxi not offered; Guangdong 2430, up 10; and Fujian 2330, up 20). The price rebound is due to that rapeseed is in a tight supply outlook as it is difficult for China and Canada to settle their issues in the near run. However, the price rebound will be restricted and the overall market remains in fluctuations when rapeseed meal demand is now severely influenced by its largely narrowed price spread with soybean meal; the rapeseed meal stock in coastal areas last week increase to 29,000 tonnes, up by 7%; the influence of African swine fever will continue for quite a long time; the imported soybean arrivals in next four months will be huge. Buyers are suggested to replenish properly upon low price and be prudent if chasing high.

(USD $1=CNY 6.87)