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Daily Review on Meal Market in China--20/11/2019

Today (Nov. 20), the market for meals in China is shown as follows:

Soybean meal: US soybean futures inched higher last night. Meal futures moderately fall on the Dalian Commodity Exchange today. Spot soybean meal prices steadily decline by 10-20 yuan/tonne in tepid trading. Specifically, the price settles at 2,910-3,130 yuan/tonne today. (Tianjin 3,130, Shandong 3,040-3,060, Jiangsu 2,970-2,980, Dongguan 2,910-2,920, and Guangxi 2,940-2,950, Fujian 2,940-2,950). Gross crush margins for Brazilian soybeans on the DCE hit 242-272 yuan/tonne, which attracts Chinese mills to keep on booking imports from South America. Besides, hog prices have been stepping down in China recently, and the demand from aquaculture has gradually gone into the slack season. The strong rallies in oil futures boost traders’ intention to buying up on oils and selling meals. Still, soybean stocks posted a year-on-year decline of 51% and blocked in tight supplies, so mills have no choice but to keep low operation rates, and soybean meal stocks thus fall to a nearly six-year low. And China is doing everything possible to accelerate hog production, and the amount in breeding has risen from the bottom; thus, there is potential for a recovery in demand for meals. Short-term soybean meal prices will keep range bound, and may fluctuate to rise with higher demand. Buyers can wait for low and stable prices to make appropriate replenishment. 

Imported rapeseed meal: Imported rapeseed meal declines slightly in price today, of which it settles down 10-20 yuan/tonne at 2,140-2,220 yuan/tonne in coastal areas (Guangxi 2,180, stable; Guangdong not offered; Fujian not offered). Recent pork prices fall back continuously, which affects the optimistic market sentiment. Besides, there is a sign that African swine fever will spread again in some regions, and the demand for South aquaculture is entering into an off-season, so rapeseed meal price is dampened. However, factory inventory of rapeseed drops further, and the supply is expected to get tightened amid unclear relations between China and Canada. Moreover, there is renewed uncertainty over U.S.-China trade negotiations. If there are any twists and turn in the negotiations again, the supply of raw materials of soybean and rapeseed will get even tighter, which leads oil mills to raise prices. Therefore, the declines of rapeseed meal prices are limited by these factors, and short-term prices will fluctuate at a narrow range. Buyers can make proper replenishment upon low and stable prices.

Imported fishmeal: Imported fishmeal prices are stable today. Peruvian Standard SD with 65% protein content is 8,900-9,000 yuan/tonne; Peruvian higher-quality SD with 65% protein content is 9,100-9,600 yuan/tonne; Peruvian higher-quality SD with 67% protein content is 9,500-10,100 yuan/tonne; and Peruvian Super Prime SD with 68% protein content is 9,900-10,200 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 is negative to the market. 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 probably continue to steady with a weakening trend 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 stays stable 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. Furthermore, meals on DCE today fall back mildly, and spot soybean meal keeps stable with a decline of 10-20 yuan/tonne. But cottonseed price is high, so factories have a strong will to raise cottonseed meal prices under the support of cost. Thus, short-term cottonseed meal market is likely to move in a tight range. Buyers can make proper replenishment on the dips.

(USD $1=CNY 7)