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Daily Review on Meal Market in China--7/11/2019

2019-11-07 www.cofeed.com
Today (Nov. 7), the market for meals in China is shown as follows:

Soybean meal: US soybean ended lower last night. Meal futures narrow declines on the Dalian Commodity Exchange today. Spot soybean meal prices steadily fluctuate by 10-20 yuan/tonne in tepid trading. Specifically, the price settles at 2970-3140 yuan/tonne today. (Tianjin 3,140, Shandong 3,070-3,100, Jiangsu 3,000-3,030, Dongguan 2,970, and Guangxi 2,990-3,000, Fujian 2,970-3,000). The timely and beneficial rain is forecast to arrive in main planting regions of Brazil in the next two weeks, which will promote soybean crop planting and growth. In addition, Brazilian real has gone weakening substantially. China and the US may not sign the phase one trade deal until December possibly in Europe and Asia. The uncertain deal has also weighed down US soybean futures. Besides, Chinese importers are scooping up on soybeans due to good crush margins, which has dragged down soybean meal prices. But soybean crush now remains low due to soybean shortages, and soybean meal stocks have fallen to a multi-year low. Mills in north and northeast China have set limited delivery quantity, especially in Shandong where mills are stuck with trucks at their gates. The downward space of soybean meal price is thus narrowed. Hog in breeding saw a month-on-month increase of 1.62% for the first time since the African swine fever, and sow head also rose by 3.77% for a second straight month, according to Cofeed. The margins for breeding owned piglet reach 3250 yuan, which will encourage large farms to increase the amount. And the demand for soybean meal is expected to recover. There is probably little space for downside, and soybean meal prices will remain strengthening due to an over 24% cut in US soybean production and the inflation expectation in China. Buyers can wait for low and stable prices to make moderate replenishment and remain cautious in chase after excessively high prices. 

Imported rapeseed meal: Imported rapeseed meal stays stable with slight declines in price today, of which it partially settles down 10 yuan/tonne at 2,200-2,320 yuan/tonne in coastal areas (Guangxi 2,220, stable; Guangdong 2,200; Fujian not offered). The U.S.-China trade negotiations are in good shape, and oil mills keep purchasing imported soybeans due to good crush margins. Meanwhile, the impact of ASF is not over, and aquaculture is entering into an off-season. Also, Canada-China relations have warmed as China resumes the imports of Canadian pork and beef. However, oil mills have a strong will to raise price with decreasing inventory of soybean meal and rapeseed meal. Besides, there are more than 24% of cut in U.S. soybean production, and declines of short-term rapeseed meal price are limited by inflation expectations. Buyers can stay on the sideline and make replenishment upon low and stable prices.

Imported fishmeal: Imported fishmeal price goes 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, 9,900-10,200 yuan/tonne for Japanese SD with 67% protein content, and 10,100-10,600 yuan/tonne for super SD with 68% protein content. The investigation on fish resources is still underway in the centre-north regions of Peru, and fishmeal merchants are also holding meetings in Shanghai at present. The Peruvian government has not released the fishing quotas, so traders now are predicting it and propping up prices, and some traders with tight supplies are stalling on the sales. But aquaculture in North China has completed as the weather gets cool, and the African swine fever is still spreading, so there is not much improvement in the demand side. The overall market is predicted to keep steady in the near term. Stocks at port: Huangpu 94,000 tonnes, Fuzhou 32,000 tonnes, Shanghai 48,000 tonnes, Tianjin 1,000 tonnes, Dalian 8,000 tonnes, Fangchenggang 1,000 tonnes and 4,000 tonnes at other ports. FOB prices from foreign merchants today: it is quoted steadily at 1,180 USD/tonne for Peruvian Standard SD with 65% protein content and 1,380 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 1,330 USD/tonne.

Cottonseed meal: Cottonseed meal price stays stable with some rises of 2050 yuan/tonne today. According to Cofeed, nationwide hog herd has rebounded for the first time, of which it up by 1.62% from last month. And the sow stock has increased by 3.77% from the previous month, the second successive monthly rebound. As breeding enterprises have started to recover hog breeding, the demand for meals is hopeful to pick up. And cottonseed price is high. Therefore, cottonseed meal market is supported by these factors. However, cottonseed meal market is also weighed down by poor demand affected by narrowed price gap between soybean meal and cottonseed meal, and short-term cottonseed meal price may fluctuate in a narrow range. Under the background of more than 24% of cut in U.S. soybean production and domestic inflation expectations, meals market outlook is likely to stay strong overall. Buyers can keep safety inventory on the dips and remain cautious in chasing up prices.

(USD $1=CNY 7)