Today is 08/05/2020

Daily Review on Meal Market in China--27/8/2019



Today (Aug. 27th), the market for meals in China is shown as follows:

Soybean meal: Donald Trump said U.S. trade officials received calls from their Chinese counterparts and predicted a trade deal with China, and Chinese Vice Premier Liu He said that China was willing to resolve the trade dispute through negotiations. Due to such a positive sign in trade relationship, U.S. soybeans closed higher last night, but meal futures open lower to fall on the Dalian Commodity Exchange today. Spot bids for soybean meal steadily drop by 10-20 yuan/tonne in lighter trading. Specifically, the price settles at 2,950-3,050 yuan/tonne in coastal areas. (Tianjin 3,050, Shandong 2,960-3,030, Jiangsu 2,960-3,030, Dongguan 2,950-3,000, and Guangxi 3,000-3,020). When soybean crush will probably return to over 1.80 mln tonnes both this week and next week, the African swine fever is still spreading; hence, soybean meal price is restricted. However, import cost is lifted by a substantial devaluation in Chinese yuan, and Brazilian soybeans see higher premiums on a tight supply outlook in the fourth quarter. Meanwhile, as the market is busy stocking up for the Mid-autumn Festival, soybean meal inventory in China has declined 11% to 790,000 tonnes last week. Besides, China and the United States are less likely to reach a deal in the short term. These will help boost meal prices. There is little room for the price to fall, and the overall market will fluctuate to maintain strong. Buyers can wait for the moment. 

Imported rapeseed meal: Imported rapeseed meal declines in price today, of which it settles down 10-20 yuan at 2,430-2,500 yuan/tonne in coastal areas. (Guangxi not offered; Guangdong 2,460, down 20; and Fujian 2,430, down 20). There are still signs for a detente in the trade relationship between China and the United States. Besides, soybean crush may gradually increase in the coming few weeks, but meal demand is still subject to the rampant ASF. Therefore, rapeseed meal prices decline today. But rapeseed supply may get tightened due to pending issues between Beijing and Ottawa, and the inventories of rapeseed meal and soybean meal have both dropped; thus, rapeseed meal has limited price declines from this aspect. The overall market is predicted to stay strong, and buyers can wait for low and stable prices to make replenishment in small batch. 

Imported fishmeal: Imported fishmeal price stays stable today with some negotiating space. Quotation at ports: it is priced steadily at 9,600-9,700 yuan/tonne for Peruvian Standard SD with 65% protein content, 9,800-10,200 yuan/tonne for Thai SD with 67% protein content, 10,100-10,400 yuan/tonne for Japanese SD with 67% protein content, and 10,500-10,900 yuan/tonne for super SD with 68% protein content and 10,000-10,400 for old products. Stocks at port: Huangpu 136,000 tonnes, Fuzhou 34,000 tonnes, Shanghai 87,000 tonnes, Tianjin 1,000 tonnes, Dalian 18,000 tonnes, Fangchenggang 1,000 tonnes and 4,000 tonnes at other ports. The prices steadily decline in foreign markets today: it is down by 10 USD at 1,260 USD/tonne for Peruvian Standard SD with 65% protein content and also down by 10 USD at 1,370 USD/tonne for super SD with 68% protein content. Chilean Standard SD with 65% protein content is 1,300 USD/tonne, and super SD with 68% protein content at 1,520 USD/tonne. Due to a slowdown in demand growth from aquaculture and a smaller hog herd subject to the African swine fever, fishmeal consumption is limited. Meanwhile, domestic inventory stays at a high level with continuous arrivals of new fishmeal from Peru. Holders have lowered down their quotations as they are under sales pressure, fishmeal prices are thus restricted. But there is still support from growing import cost with the substantial devaluation of Chinese yuan. Overall, short-term fishmeal market is predicted to stay stable with a weak trend.

Cottonseed meal: Today cottonseed meal stays stable when the demand is affected by the devastating outbreak of African swine fever and the hog feed sales in July decline by almost 40% from the same period last year; soybean meal is dropping away from cottonseed meal; today meals on DCE fall back with low open, and spot soybean meal is stable with a decline of 10-20 yuan/tonne as the US-China trade tension may ease after Trump says China and US make a phone call and US is going to have a deal with China, and China's Vice Premier Liu He, its lead trade negotiator, said, "China is willing to resolve its trade dispute with the United States through calm negotiations and resolutely opposes the escalation of the conflict." However, the cottonseed meal market is supported by the low operation rates and stock, a concern over US soybean crop reduction and a favorable domestic meal market owing to trade war. Short-term cottonseed meal is likely to go strong and buyers had better maintain proper stock level upon low price, and not chase high.

(USD $1=CNY 7.08)