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Daily Review on Meal Market in China--09/10/2019

2019-10-09 www.cofeed.com
Today (Oct. 09), the market for meals in China is shown as follows:

Soybean meal: US soybeans rose further last night on forecasts for a snowstorm in U.S. Midwest, and meal futures also extend gains on the Dalian Commodity Exchange today. Spot soybean meal prices increase by 10-30 yuan/tonne with some low-level purchases, yet with lukewarm trading at high levels. Specifically, the price settles at 2,980-3,100 yuan/tonne in coastal regions (Tianjin 3,100, Shandong 3,050-3,080, Jiangsu 2,990-3,020, Dongguan 2,980-3,010, and Guangxi 2,990-3,010). The U.S. Department of Commerce announced sanctions against 28 Chinese entities that were put on its so-called Entity List. In response, China said it would take all necessary measures to safeguard its own interests and could also move forward with its own list of unreliable entities. This has added more uncertainty to this round of US-China trade negotiations. Meal and oil futures prices continue to rise in China. The inventory of soybean meal is decreasing with a sharp drop in operation rates during the National Day holiday. Besides, the overall profit in the breeding industry is quite decent, and local governments are providing strong support for resuming the hog breeding. Mills are thus trying to prop up prices, and this is bullish to meal market. But the price rises may be subdued by the African swine fever and the upcoming harvests and sales of US soybeans. Overall, short-term soybean meal prices may fluctuate to stay strong, and buyers are suggested to replenish on the dips for appropriate stocks, but not to drive up prices excessively. 

Imported rapeseed meal: Imported rapeseed meal rises in price today, of which it settles up 30-40 yuan/tonne at 2,380-2,500 yuan/tonne in coastal areas (Guangxi 2,380, up 30; Guangdong 2,500, up 40; Fujian 2,400, up 40). The rapeseed supply is getting tightened due to the unsolved issues between China and Canada, and rapeseed crush in coastal areas will keep falling, which leads oil mills to prop up prices. But the marketing of new US soybeans is approaching, and overall demand for meals is poor due to the spread of African swine fever, so there is not much improvement in terminal demand. As of last Friday, inventory of rapeseed meal has increased by 6% to 34,000 tonnes in coastal areas. Therefore, all these factors limit the rises of rapeseed meal price, and short-term price will mainly fluctuate to stay strong. Buyers can make proper replenishment on the dips and remain cautious in chasing up prices.

Imported fishmeal: Imported fishmeal is quoted higher with some staying stable today. Quotation at ports: it is quoted higher by 100-200 yuan/tonne separately at 9,100-9,400 yuan/tonne for Peruvian Standard SD with 65% protein content, 9,400-9,600 yuan/tonne for Thai SD with 67% protein content, 9,700-10,000 yuan/tonne for Japanese SD with 67% protein content, and higher by 200 yuan at 10,100-10,300 yuan/tonne for super SD with 68% protein content. Stocks at port: Huangpu 123,000 tonnes, Fuzhou 36,000 tonnes, Shanghai 78,000 tonnes, Tianjin 1,000 tonnes, Dalian 13,000 tonnes, Fangchenggang 1,000 tonnes and 4,000 tonnes at other ports. FOB prices are stable from foreign merchants today: it is 1,090 USD/tonne for Peruvian Standard SD with 65% protein content and 1,290-1,310 USD/tonne for super SD with 68% protein content. Chilean Standard SD with 65% protein content is 1,100 USD/tonne, and super SD with 68% protein content at 1,300 USD/tonne. Domestic aquaculture only has tepid demand for fishmeal, and due to the decreasing hog herd under the spread of the African swine fever, the consumption of in hog feed mixed with fishmeal is also restricted. But fishmeal inventory is reducing as feed enterprises are replenishing after the holiday, so holders are encouraged to raise prices. Overall, fishmeal market is predicted to stay stable to consolidate in the near term. 

Cottonseed meal: Cottonseed meal price stays stable with some declines of 50-100 yuan/tonne today. The cottonseed meal price are depressed by the increasing supply due to a rise of operation rate, the spread of African swine fever, as well as the demand affected by narrowed price gap between soybean meal and cottonseed meal. However, meals on DCE today continue to rise, and spot soybean meal is up 10-30 yuan/tonne. These are positive to cottonseed meal market and may limit the declines of cottonseed oil prices. On the other hand, short-term cottonseed meal is likely to fall back with fluctuations continuously with the increasing operation rate, so buyers are suggested to buy on immediate demand. In addition, U.S. Commerce Department has added 28 Chinese enterprises to the “Entity List” for sanctions, and China says it will take all necessary measures to safeguard its interests and issue the “Unreliable Entity List” recently. It has brought more uncertainties to this round of Sino-US trade negotiation, and buyers can keep a close eye on new development.

(USD $1=CNY 7.07)