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Daily Review on Meal Market in China--25/10/2019

2019-10-25 www.cofeed.com
Today (Oct. 25), the market for meals in China is shown as follows:

Soybean meal: US soybean futures fell last night on rising harvest pace due to dry weather conditions in the coming week and on disappointing sales to China. The USDA weekly export report showed that, in the week as of October 17th, net export sales of 2019/20 soybeans dropped to a two-month low of 475,200 tonnes, of which only one boatload to China. And meal futures swing at a narrow range on the Dalian Commodity Exchange today. Spot soybean meal prices steadily move ups and downs by 10-20 yuan/tonne with few purchases for spot contracts and some purchases at low-level forward contracts. Specifically, the price settles at 3,070-3,260 yuan/tonne today. (Tianjin 3,270, Shandong 3,180-3,200, Jiangsu 3,140-3,150, Dongguan3,070-3,100, and Guangxi 3,080-3,100). As China and the US have reached a preliminary deal, soybean imports are expected to increase later, with a monthly average of over 8 mln tonnes in November and December. Moreover, with a sharp rise in soybean oil prices, DCE crush margins for soybeans from South America and the US have rallied to 270-290 yuan/tonne. Buyers now remain quite cautious of high prices, and DCE meal futures are in the adjustment on the arbitrage of buying oils and selling meals, so soybean meal spots are also fluctuating at the narrow range. Along with the sudden and huge profits in hog breeding and strong support from local governments, some large farms have recovered hog breeding, so that feed production also posted a significant increase in September. In addition, soybean meal stocks are quite low at present, especially in North China, where mills have set strict delivery quantities. Overall, before the stocks weigh down the market, soybean meal market will not drop sharply and will keep its strengthening trend. Buyers are suggested to remain cautious when chasing after higher spot prices and to make appropriate replenishment on low-level forward basis. 

Imported rapeseed meal: Imported rapeseed meal declines in price today, of which it partially settles down 10 yuan/tonne at 2,340-2,450 yuan/tonne in coastal areas (Guangxi 2,350, down 10; Guangdong 2,450; Fujian not offered). As the weather gets colder, aquaculture will enter into an off-season period. Meanwhile, the trade war is easing, so U.S. soybeans and mixed meals may flood into Chinese market. Additionally, rapeseed and soybean crush has rebounded significantly in recent two weeks, which has dampened rapeseed meal price. However, rapeseed is still supported by relations between China and Canada, and there will be no cargoes of rapeseed in most factories subsequently. It is predicted that rapeseed is still in tight supply, and price declines of rapeseed meal are also limited. Hence, short-term rapeseed meal market may stay strong with fluctuations at a narrow range. Buyers can stay on the sideline or buy on immediate demand.

Imported fishmeal: Imported fishmeal price are stable today. It is 9,100-9,500 yuan/tonne for Peruvian Standard SD with 65% protein content, 9,400-9,800 yuan/tonne for Thai SD with 67% protein content, 9,900-10,000 yuan/tonne for Japanese SD with 67% protein content, and10,100-10,500 yuan/tonne for super SD with 68% protein content. Stocks at port: Huangpu 100,000 tonnes, Fuzhou 31,000 tonnes, Shanghai 58,000 tonnes, Tianjin 1,000 tonnes, Dalian 6,000 tonnes, Fangchenggang 1,000 tonnes and 4,000 tonnes at other ports. FOB prices from foreign merchants today: it is 1,110 USD/tonne for Peruvian Standard SD with 65% protein content and 1,310-1,330 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. It is hard to boost the demand for fishmeal in domestic aquaculture industry, and due to the influence of the African swine fever, the consumption of feed is also slow. But there are few fishmeal arrivals at domestic ports, where total stocks are in the downtrend. Most manufacturers have tight supplies now and are stalling on the sales, which is good to the market. On the whole, the market is predicted to steady with a strengthening trend in the near term. 

Cottonseed meal: Cottonseed meal price stays stable with some fluctuations of 50 yuan/tonne today. There are excessive profits in pig breeding, and some major enterprises begin to resume the breeding under full support of government. Besides, the production of pig feed in September significantly increased. And factories basically have no stock in hand. Hence, cottonseed meal market is supported by these factors. However, cottonseed meal market is also dragged down by less demand affected by narrowed price spread between soybean meal and cottonseed meal, and spot soybean meal stays stable with a decrease of 10-20 yuan/tonne today. It is predicted that short-term cottonseed meal may fluctuate to stay strong. Buyers can make proper replenishment on the dips and not chase up prices too high.

(USD $1=CNY 7.07)