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Daily Review on Meal Market in China--27/11/2019

Today (Nov. 27), the market for meals in China is shown as follows:

Soybean meal: Improving South American crop weather weighed on futures by bolstering soybean production prospects for Brazil and Argentina. U.S. soybean futures went down on Tuesday on a mix of export competition from South American supplies and uncertainty in US-China trade talks. Meal futures fall after lower opens on the Dalian Commodity Exchange today. Spot soybean meal prices follow to decline by 10-20 yuan/tonne in light trading. Specifically, the price settles at 2,870-3,070 yuan/tonne today. (Tianjin 3,070, Shandong 3,030-3,050, Jiangsu 2,930-2,960, Dongguan 2,870-2,890, and Guangxi 2,900-2,910, Fujian 2,920-2,930.) Due to handsome crush margins, mills have been actively enhancing operation rates, so soybean crush went back to 1.77 mln tonnes last week and will probably go above 1.80 mln tonnes in the coming two weeks. Meanwhile, downstream demand turns tepid as aquaculture has entered into the slack season in south China, and soybean meal stocks have increased by 4.5%. Soybean meal prices are thus curbed. However, soybean and soybean meal stocks both stay at low levels now. Meanwhile, the amount of hog and egg-laying poultry is picking up, and the peak season for replenishment in the run up for the New Year’s Day and the Spring Festival is about to come. Mills are propping up prices, which helps limited declines. Short-term soybean meal prices will mainly keep range bound, and buyers can wait for low and stable prices to make appropriate replenishment. 

Imported rapeseed meal: Imported rapeseed meal stays stable with fluctuations in price today, of which it settles up 10 yuan/tonne at 2,150-2,250 yuan/tonne in coastal areas (Guangxi 2,220; Guangdong not offered; Fujian not offered). A drop in hog prices results in panic slaughter, and the aquaculture in South China has weakened. Moreover, Chinese oil mills purchase a large number of South America soybeans, which is attracted by good crush margins of oil futures. These factors dampen rapeseed meal price. However, rapeseed supply is tightening amid tensions between China and Canada, and most factories have no cargoes of rapeseed arriving at ports in the late period. In consequence, the rapeseed crush will be down to super low levels for the next two weeks, so oil mills intend to prop up price. Thus, it is hard for the price to decline in a short term. Buyers can wait for low and stable prices to make proper replenishment.

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 continue to raise their quotations today, which supports spot fishmeal market in China. Domestic market now is positive due to the replenishment for the New Year’s Day. 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 is predicted to continue to steadily fluctuate to adjust in the short term. Stocks at port: Huangpu 94,000 tonnes, Fuzhou 33,000 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 20 USD at 1,380 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 20 USD at 1,360 USD/tonne.

Cottonseed meal: Cottonseed meal price stays stable with some declines of 20-30 yuan/tonne today. The cottonseed meal market is weighed down by poor demand under narrow price gap between soybean meal and cottonseed meal, off-season period of demand from aquaculture, as well as little shipment of cottonseed meal in some factories. Furthermore, meals on DCE today fall back with low opens, and spot soybean meal price today follow its futures to slip by 10-20 yuan/tonne. But cottonseed is pricey, which strengthens the willingness of oil mills to prop up cottonseed meal prices under the support of cost. Therefore, the cottonseed meal price will mainly fluctuate narrowly in a short term. Buyers can stay on the sideline and make proper replenishment upon low and stable prices.

(USD $1=CNY 7.03)