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Daily Review on Meal Market in China--2/12/2019

Today (Dec. 2), the market for meals in China is shown as follows:

Soybean meal: China criticized the US side on signing the Hong Kong-related bill into law and warned that it would take strong countermeasures, and the two countries has been at odds on whether to cancel additional tariffs in phase one trade deal. US soybean futures closed lower last Friday on concerns over trade disputes. Meal futures drop slightly on the Dalian Commodity Exchange today. Spot soybean meal prices slip by 10-20 yuan/tonne in tepid trading with some purchases upon low forward basis. Specifically, the price settles at 2,830-3,010 yuan/tonne today. (Tianjin 3,010, Shandong 3,000-3,030, Jiangsu 2,880-2,920, Dongguan 2,830-2,840, and Guangxi 2,860-2,880, Fujian 2,900-2,930.) Due to good crush margins on the DCE, soybean arrivals are expected to reach 9.35 mln tonnes in December, and Chinese importers bought a total of nearly 20 cargoes of Brazilian soybeans last week. Mills are active in soybean crush, so soybean meal stocks continued to increase by 11% to 410,000 tonnes as of November 29th. And aquaculture in south China has also entered into the slack season. All these are weighing down meal prices. But mills in Shandong will sharply reduce their operation rates in early December, and soybean and soybean meal stocks have been at relatively low levels in coastal regions. Millers are propping up prices on account of sharply increasing hog prices and the upcoming peak demand for the New Year’s Day and the Spring Festival, and this helps limit declines in soybean meal prices. Short-term prices will likely keep range bound to adjust, and will hopefully go up on growing demand in the market or setbacks in China-US trade negotiations. Buyers can wait for low and stable prices to make appropriate replenishment.

Imported rapeseed meal: Imported rapeseed meal steadily fluctuates in price today, of which it settles at 2,140-2,250 yuan/tonne with a fluctuation of 10 yuan/tonne in coastal areas (Guangxi 2,220; Guangdong not offered; Fujian not offered). Most factories have no cargoes of rapeseed arriving at ports amid tensions between China and Canada. Thus, rapeseed supply is predicted to be tightening continually, and oil mills keep reducing the operation rate. Last week, rapeseed inventory in coastal areas decreased to 17,000 tonnes, a decline of 34% week on week. In consequence, oil mils are more willing to raise prices. Nevertheless, oil plants keep purchasing South America soybean due to good crush margin of soybean futures. Moreover, the demand from aquaculture in South China is also entering into an off-season, which affects demand for meals. Therefore, the rapeseed meal price is curbed by these factors. Buyers can wait for low and stable prices to make proper replenishment.

Imported fishmeal: Imported fishmeal prices stay stable today with certain negotiation space. Peruvian Standard SD with 65% protein content is 8,900-9,100yuan/tonne; Peruvian higher-quality SD with 65% protein content is 9,200-9,500 yuan/tonne; Peruvian higher-quality SD with 67% protein content is9,600-9,900 yuan/tonne; and Peruvian Super Prime SD with 68% protein content is 9,900-10,200 yuan/tonne. The demand for fishmeal is hard to improve significantly in the short term, for aquaculture was over in north China with cold winter coming and the African swine fever is still spreading. And traders tend to stay on the sidelines, which is bearish to the market. But the replenishment in the run up for the New Year’s Day has helped keep quotations firm at some ports. Overall, short-term fishmeal market is predicted to keep steady in China. Stocks at port: Huangpu 94,000 tonnes, Fuzhou 33,000 tonnes, Shanghai 43,000 tonnes, Tianjin 1,000 tonnes, Dalian 10,000 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 1,380 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 at 1,360 USD/tonne.

Cottonseed meal: Cottonseed meal price stays stable with some declines of 10-30 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 factories. Furthermore, meals on DCE today fall back slightly, and spot soybean meal prices today 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 be stable momentarily and mainly fluctuate narrowly in a short term. Buyers can maintain a wait-and-see attitude.

(USD $1=CNY 7.03)