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Daily Review on Meal Market in China--25/11/2019

Today (Nov. 25), the market for meals in China is shown as follows:

Soybean meal: US soybean closed lower last Friday night. But BMD soared last Friday afternoon, so the arbitrage of buying oils and selling meals is active on the Dalian Commodity Exchange today. Meal futures fell after lower opens and rebound in the afternoon on the DCE. Spot soybean meal prices steadily go down by 10-20 yuan/tonne, with better trading at low levels this afternoon. Specifically, the price settles at 2,900-3,080 yuan/tonne today. (Tianjin 3,080, Shandong 3,030-3,050, Jiangsu 2,930-2,960, Dongguan 2,900-2,910, and Guangxi 2,910-2,920, Fujian 2,910-2,930.) Good crush margins for South American soybeans on the DCE have been attracting Chinese mills to keep on booking imports, and they bought a total of 35 cargoes from South America and 2 cargoes from US Gulf last week. Aquaculture has entered into the slack season in South China, so downstream buyers show tepid demand at present. Besides, soybean crush rallied to 1.77 mln tonnes last week and will likely go further above 1.80 mln tonnes in the coming two weeks. And soybean meal stocks also follow to increase 4.5% to 310,000 tonnes. Still, there has been an increment in the number of hog and egg-laying poultry, and the peak season for replenishing for the New Year’s Day and the Spring Festival is also coming, so the demand is expected to grow later. Mills are propping up prices, which is underpinning the market. Short-term soybean meal prices may continue to 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 can wait for low and stable prices to replenish for stocks.

Imported rapeseed meal: Imported rapeseed meal rises in price today, of which it settles up 10-20 yuan/tonne at 2,160-2,230 yuan/tonne in coastal areas (Guangxi 2,180, stable; Guangdong not offered; Fujian not offered). The rapeseed is still supported by the unsolved issues between China and Canada, so most factories have no cargoes of rapeseed arriving at ports in the late period. Thus, rapeseed supply is predicted to be tightening increasingly, and oil mills continue reducing the operation rate. In consequence, rapeseed price may stop declining and usher in a modest rebound after a continuous fall. Nevertheless, oil plants keep purchasing South America soybean due to good crush margin of soybean futures. Moreover, recent pork prices fall back continuously, and the demand for South aquaculture is also entering into an off-season. Last week, the inventory of rapeseed meal increased to 27,000 tonnes in coastal areas, up by 17% from the previous week. Therefore, the rises of rapeseed meal price are curbed. Buyers can make proper replenishment on the dips to keep a safety inventory.

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. 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 44,000 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 some fluctuations of 50 yuan/tonne today. The price of cottonseed is high, so cottonseed meal market is 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. Furthermore, spot soybean meal price today steadily declines by 10-20 yuan/tonne. Therefore, the cottonseed meal price will mainly fluctuate narrowly in a short term and face a dilemma on fall or rise. Buyers can make proper replenishment upon low and stable prices.

(USD $1=CNY 7.04)