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Daily Review on Meal Market in China--19/11/2019

Today (Nov. 19), the market for meals in China is shown as follows:

Soybean meal: Crop-boosting rains were expected to fall in both Brazil and Argentina. And after President Donald Trump said that he may not roll back some previously-imposed additional tariffs for reaching phase one deal, a foreign media reported that China was pessimistic about a trade deal with the United States. Therefore, US soybean futures closed lower last night. Meal futures also move sideways to down on the Dalian Commodity Exchange today. Spot soybean meal prices steadily fluctuate by 10-20 yuan/tonne in weaker trading. Specifically, the price settles at 2,920-3,130 yuan/tonne today. (Tianjin 3,130, Shandong 3,030-3,060, Jiangsu 2,970-2,980, Dongguan 2,910-2,920, and Guangxi 2,930-2,940, Fujian 2,930-2,950). Gross crush margins for Brazilian soybeans on the DCE hit 257 yuan/tonne, which attracts Chinese mills to keep on booking imports. Hog breeding may turn waning with continuous sharp declines in prices and as there is again the sign of the spread of the African swine fever in some regions. And the demand for meals from aquaculture in south China also gradually goes into the off season. Soybean meal prices have limited space for rebounds and thus fluctuate today. But soybean sees a year-on-year drop of 51% in stocks and tight supplies, so mills are keeping low operation rates. Soybean meal stocks have fallen to a nearly 6-year low and some northern mills now have very tight supplies. Besides, the demand outlook for meal products is expected to get bright with a rise in hog amount, especially now as China’s Ministry of Agriculture and Rural Affairs calls on the nine provinces, districts and cities in south China to make all-out efforts to accelerate the recovery in hog production. All these will help support the market. Short-term soybean meal prices will keep range bound. Buyers with adequate stocks can just wait as oil futures have again gone strong. 

Imported rapeseed meal: Imported rapeseed meal stays stable with a slight rise in price today, of which it settles up partially 10 yuan/tonne at 2,150-2,230 yuan/tonne in coastal areas (Guangxi 2,180, stable; Guangdong not offered; Fujian not offered). Some factories have no rapeseed arriving at ports due to the tight supply of rapeseed under tensions between China and Canada. Therefore, the rapeseed crush is predicted to decline, and rapeseed meal inventory will fall further. In consequence, oil mills are more willing to raise prices. However, the rises of rapeseed meal price are curbed as pork prices continue to fall back recently; the demand for aquaculture is also entering into an off-season; oil mills keep purchasing Brazilian soybeans due to good crush margins of soybean futures. Buyers are suggested to make proper replenishment on the dips and not to drive up prices excessively.

Imported fishmeal: Imported fishmeal prices are stable with some declines today. Peruvian Standard SD with 65% protein content is 8,900-9,300 yuan/tonne, a partial decline of 300-400 yuan/tonne; Peruvian higher-quality SD with 65% protein content is 9,100-9,600 yuan/tonne, a partial decline of 100 yuan/tonne; Peruvian higher-quality SD with 67% protein content is 9,500-10,100 yuan/tonne, a partial decline of 100 yuan/tonne; and Peruvian Super Prime SD with 68% protein content is 9,900-10,200 yuan/tonne, a partial decline of 100 yuan/tonne. As the weather gets colder, aquaculture has already been over in north China. And due to the African swine fever, hog feed still has limited demand for fishmeal. Meanwhile, holders now are under pressure due to the higher-than-expected fishing quotas released by the Peruvian government, and traders have a strong intention to clear their stocks, which have dragged down the quotation. But traders are also placing hope on the restocking in the run up for the New Year’s Day, which may bring support to the market. Overall, fishmeal market will likely continue to decline in the short term. Stocks at port: Huangpu 93,000 tonnes, Fuzhou 32,000 tonnes, Shanghai 46,000 tonnes, Tianjin 1,000 tonnes, Dalian 9,000 tonnes, Fangchenggang 1,000 tonnes and 4,000 tonnes at other ports. FOB prices from foreign merchants today: it is quoted steadily at 1,130 USD/tonne for Peruvian Standard SD with 65% protein content and 1,280 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 1,260 USD/tonne.

Cottonseed meal: Cottonseed meal price stays stable with some fluctuations of 10-20 yuan/tonne today. The cottonseed meal prices are depressed by poor demand affected by narrow price gap between soybean meal and cottonseed meal and slow delivery of some factories. But factories are also more willing to prop up cottonseed meal prices under high price of cottonseed. Thus, short-term cottonseed meal market is likely to fluctuate at a narrow range. Buyers can make proper replenishment upon low and stable prices. As for the trade war, U.S. Pres. Donald Trump said that he may not roll back tariffs imposed previously in the first phase of deal. And foreign media reported that China was pessimistic in reaching a trade agreement.

(USD $1=CNY 7)