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Daily Review on Meal Market in China--21/11/2019

Today (Nov. 21), the market for meals in China is shown as follows:

Soybean meal: Reuters reported that a phase one trade deal between China and the United States could slide into 2020. And Donald Trump threatened that he would impose additional tariffs on Chinese commodities if two countries failed to reach the phase one deal before December 15. US soybean futures closed with losses on renewed concerns over US-China trade relations. Meal futures fluctuate to down on the Dalian Commodity Exchange today. Spot soybean meal prices steadily go down by 10-20 yuan/tonne, attracting some deals at low levels. Specifically, the price settles at 2,910-3,110 yuan/tonne today. (Tianjin 3,110, Shandong 3,040-3,060, Jiangsu 2,950-2,980, Dongguan 2,910-2,920, and Guangxi 2,910-2,940, Fujian 2,920-2,940). US farmers have sped up soybean harvests, and weather forecast is beneficial to crop areas of South America, so US soybean futures move on a weakening trend. And in China, hod prices have posted relatively huge declines recently, and the demand from aquaculture also goes into the slack season. Besides, traders are taking arbitrage of buying oils and selling meals due to strong oil futures. These are curbing meal prices. Still, mills have to keep low operation rates due to tightening soybean stocks, and soybean meal stocks have thus fallen to a six-year low. In addition, Chinese government is sparing no efforts to recover hog production, and with the increasing pigs in breeding, the demand for meals is expected to rebound. Short-term soybean meal prices will keep range bound, and will hopefully fluctuate to rally moderately if there is any setback in US-China trade relations or if the demand gets warm. Buyers are suggested to wait for low and stable prices to replenish for stocks and remain cautious in chasing up prices.

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 2,160-2,230 yuan/tonne in coastal areas (Guangxi 2,180, stable; Guangdong not offered; Fujian not offered). The uncertainty over Sino-US trade relations has increased. If there happens any twists and turns in the negotiations again, the supply of raw materials of soybean and rapeseed will get even tighter. And the supply of rapeseed is predicted to be tight as most factories have no cargoes of rapeseed arriving at ports, so rapeseed price is hopeful to pick up later period. Also, oil mills tend to prop up prices. However, the crush margins of soybean futures are good, which attracts Chinese oil plants to purchase soybeans actively. Moreover, pork prices slump recently, and the demand for aquaculture is gradually entering into an off-season. Therefore, rapeseed price is curbed and weak in rising, and short-term price may fluctuate at a narrow range. Buyers are suggested to maintain safety inventory on the dips and not to chase up prices too high.

Imported fishmeal: Imported fishmeal prices are stable with certain negotiation space 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 in the short term. 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 weighing down 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 94,000 tonnes, Fuzhou 32,000 tonnes, Shanghai 45,000 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 1,280-1,330 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 1,260 USD/tonne.

Cottonseed meal: Cottonseed meal prices keep stable today. The poor demand is affected by narrow price gap between soybean meal and cottonseed meal, and some factories have slow pace of delivery. Moreover, meals on DCE today decline slightly with fluctuations, and spot soybean meal steadily drops by 10-20 yuan/tonne. Therefore, cottonseed meal price is depressed by these factors above. In addition, completion a “phase one” U.S.-China trade deal could slide into next year, according to Reuters. And U.S. president Donald Trump has threatened to raise the tariffs even higher if the two sides do not make the first phase of deal before Dec. 15, raising worries about the trade relations between China and U.S. Besides, under the support of cost, the market outlook is hopeful to rebound once the demand picks up, and factories have a strong will to raise prices. Therefore, short-term cottonseed meal price will be unlikely to fall and mainly fluctuate at a narrow range. Buyers can make proper replenishment on the dips and remain cautious in chasing up prices.

(USD $1=CNY 7.02)