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Daily Review on Meal Market in China--26/11/2019

Today (Nov. 26), the market for meals in China is shown as follows:

Soybean meal: A report said that China and the US have not reached a consensus on specific details or the scale of a tariff reduction on Chinese imports, and the weather remained favorable in soybean planting regions in South America, so US soybean futures closed lower last night. Meal futures opened higher today as some investors closed positions after booking profits in oils yesterday, but then move lower to see small losses in afternoon trading. Spot soybean meal prices steadily go down by 10-20 yuan/tonne in tepid trading. Specifically, the price settles at 2,890-3,090 yuan/tonne today. (Tianjin 3,090, Shandong 3,030-3,050, Jiangsu 2,940-2,960, Dongguan 2,890-2,900, and Guangxi 2,910-2,920, Fujian 2,920-2,930.) Chief trade negotiators from China and the United States held a phone talk this morning to reach a consensus on address relevant issues, which is bearish to domestic market. The demand from aquaculture in south China has gone slack, and soybean meal stocks also increased by 4.5% last week as soybean crush rose to 1.77 mln tonnes and will likely go above 1.80 mln tonnes in the coming two weeks. Both these have dampened soybean meal prices. Nevertheless, the amount of hog and egg-laying poultry is picking up, and the market will soon enter into the peak season for replenishing for the New Year’s Day and the Spring Festival, so mills have an intention to prop up prices. In a hybrid of the bull and the bear, short-term soybean meal prices may continue to keep range bound, and will hopefully rally moderately if there is any setback in US-China trade relations or if the demand gets warm. In consideration of fluctuations on the DCE, buyers having made replenishment can wait at the moment.

Imported rapeseed meal: Imported rapeseed meal rises in price today, of which it settles up 10-20 yuan/tonne at 2,160-2,250 yuan/tonne in coastal areas (Guangxi 2,200, 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, U.S.-China chief trade negotiators held a phone call again this morning and that both sides reached consensus on how to address relevant issues. And oil mills bought more than 40 cargoes of soybeans due to the considerable crush margins. Moreover, the demand from aquaculture in South China has entered into the slack season, and both soybean meal and rapeseed meal inventories have increased. Thus, the rises of rapeseed meal prices are curbed momentarily and mainly fluctuate at a narrow range in a short term. 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 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. Peruvian merchants offer higher today, and Chinese traders are waiting for the restocking for the New Year’s Day with the hope for some support. But aquaculture has been over in north China 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. 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 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 higher by 80 USD at 1,360 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 higher by 80 USD at 1,340 USD/tonne.

Cottonseed meal: Cottonseed meal stays stable 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 sluggish pace of shipment in some factories. Besides, U.S.-China chief trade negotiators held a phone call again this morning and that both sides reached consensus on how to move forward in their dispute, which was bearish for domestic market. 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 with stocks in hand could maintain a wait-and-see attitude.

(USD $1=CNY 7.03)