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Daily Review on Meal Market in China--22/11/2019

Today (Nov. 22), the market for meals in China is shown as follows:

Soybean meal: US soybean futures fell on a cloudy prospect of US-China trade. And meal futures extend losses on the Dalian Commodity Exchange today. Spot soybean meal prices steadily go down by 10-20 yuan/tonne. The trading seems cautious, with only some deals at low levels. Specifically, the price settles at 2,900-3,110 yuan/tonne today. (Tianjin 3,110, Shandong 3,030-3,060, Jiangsu 2,950-2,970, Dongguan 2,900-2,910, and Guangxi 2,910-2,930, Fujian 2,920-2,940). Due to good crush margins for soybeans on the DCE, China bought 4 Brazilian boatloads and 1 Argentine Thursday. US soybeans are up for sales and the weather is favorable in South America. And in China, the price for hog keeps falling recently, and the demand from aquaculture has gone slack. All these are weighing down meal prices. Nevertheless, mills have to keep low operation rates due to tightening soybean stocks, and soybean meal stocks have thus fallen to a six-year low. And with increasing pigs in breeding, the demand for meals is expected to rebound. Mills are propping up prices, so there is little space for soybean meal prices to fall further and the short term market may keep range bound. Prices will hopefully fluctuate to rally moderately if there is any setback in US-China trade relations or if the demand gets warm. Buyers can wait for low and stable prices to replenish for stocks.

Imported rapeseed meal: Imported rapeseed meal declines 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). Oil mills go on purchasing South America soybeans due to the good crush margins of soybean futures. Besides, there is a fresh wave of outbreaks of swine fever in some regions. Moreover, recent pork prices fall back continuously, and demand from South aquaculture enters into an off-season, so the rapeseed meal price is curbed. However, the uncertainty over U.S.-China trade relations has increased. If there happens any twists and turns in the negotiation again, the supply of raw material of soybeans and rapeseeds will get even tighter. And the declines of short-term rapeseed meal price are also limited by lower operation rate. Meal futures have not stopped falling yet, so buyers can wait for low and stable prices to make replenishment in batches.

Imported fishmeal: Imported fishmeal prices are stable with certain negotiation space today. Peruvian Standard SD with 65% protein content is 8,800-9,000 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. It is the Minor Snow today in Chinese solar term, and aquaculture has been over with lower and lower temperatures. The African swine fever is still lingering, so hog feed consumption can hardly be improved in the near term. Meanwhile, a higher-than-expected fishing quota set by Peruvian government is also impacting fishmeal market in China, so Chinese traders now are rushing to make shipments. But the market is also waiting for the restocking for the New Year’s Day with the hope for some support. 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 with 65% protein content and 1,280-1,330 USD/tonne for Peruvian super with 68% protein content. Chilean Standard with 65% protein content is 1,100 USD/tonne, and super with 68% protein content at 1,260 USD/tonne.

Cottonseed meal: Cottonseed meal price stays stable with individual declines of 50 yuan/tonne today. The price of cottonseed is high, so individual factories push cottonseed meal price higher under the support of cost. However, cottonseed meal market is also weighed down by poor demand under narrow price gap between soybean meal and cottonseed meal, decreasing pork prices recently and off-season period of demand from aquaculture, coupled with slow delivery of some factories. Therefore, the cottonseed meal price faces a dilemma on fall or rise and will mainly fluctuate narrowly in a short term. Buyers can stay on the sideline and make proper replenishment upon lower prices.

(USD $1=CNY 7.03)