Today is 08/05/2020

Daily Review on Meal Market in China--5/12/2019

Today (Dec. 5), the market for meals in China is shown as follows:

Soybean meal: US President Donald Trump said that trade talks with China were going “very well”, and Bloomberg said in a report that the U.S. and China were moving closer to agreeing on the amount of tariffs that would be rolled back in a phase-one trade deal. Due to easing concerns over trade disputes, US soybean futures rose last night, but meal futures open lower to drop on the Dalian Commodity Exchange today. Spot soybean meal prices decline by 10-20 yuan/tonne in tepid trading. Specifically, the price settles at 2,810-3,000 yuan/tonne today. (Tianjin 3,000, Shandong 3,000-3,010, Jiangsu 2,880--2,920, Dongguan 2,810-2,830, and Guangxi 2,830-2,850, Fujian 2,880-2,910.) Soybean futures move lower in overseas exchange, and crush margins for imported soybeans remain well on the DCE. Soybean meal stocks in coastal regions have started to rise from the low level, while the demand from aquaculture in southern China has gone slack. And with a huge quantity of alternative meals arriving at ports recently, some enterprises have adjusted their feed formula. Spot soybean meal even goes negative in prices. But mills are keeping lower-than-expected operation rates in Shandong and east China, so it will take some time for soybean meal to ease supply tensions and mills are still setting limited quantity for delivery. The rise in hog prices has again attracted farmers to increase replenishment, in addition to upcoming peak demand for the New Year’s Day and the Spring Festival, so mills are propping up prices. Due to different status in different regions, soybean meal market is strong in northern China and weak in the south. Short-term soybean meal market is predicted to keep range-bound and choppy. 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 2,180-2,300 yuan/tonne with a fluctuation of 10 yuan/tonne in coastal areas (Guangxi 2,280; Guangdong not offered; Fujian not offered). China purchases imported soybeans continually due to the good crush margins of futures, and oil mills improve the operation rate. And also, the demand from aquaculture in South area has entered into a slack season. Thus, rapeseed prices are curbed. But the rapeseed stock is tight amid tensions between China and Canada, which leads oil mills to prop up prices. Therefore, the declines of rapeseed prices are limited, and short-dated market may mainly fluctuate at a narrow range. Buyers can stay on the sideline and make appropriate replenishment upon low and stable prices.

Imported fishmeal: Imported fishmeal prices stay stable today with certain negotiation space. Peruvian Standard SD with 65% protein content is 8,900-9,100 yuan/tonne; Peruvian higher-quality SD with 65% protein content is 9,200-9,500 yuan/tonne; Peruvian higher-quality SD with 67% protein content is 9,600-9,900 yuan/tonne; and Peruvian Super Prime SD with 68% protein content is 9,900-10,200 yuan/tonne. Investors remain short with high fishing quotas, especially under good fish catches in Peru. Meanwhile, aquaculture has been wrapped up in northern China as the weather gets cold, and the African swine fever is still spreading, so it is less likely to improve the demand in the short term. Traders are still sitting up on the sidelines. But they also pinning their hopes on the New Year’s Day, waiting for support from the festival demand. Overall, fishmeal market is predicted to keep steady in the near term. Stocks at port: Huangpu 96,000 tonnes, Fuzhou 34,000 tonnes, Shanghai 41,000 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 40-50 yuan/tonne today. The demand for cottonseed meal is affected by narrow price gap between soybean meal and cottonseed meal. Besides, the aquaculture in South area is entering into a slack season, so cottonseed meal is short of support of rigid demand. And there is not much trade of cottonseed meal. In addition, U.S. President Donald Trump said that trade talks with China were going “very well”. And Bloomberg reported that U.S. and China were closer to agreeing how many tariffs would be rolled back in a “phase one” trade deal, fanning the positive mood. This is also bearish for domestic cottonseed meal prices. Meals on DCE today fall back with low opens, and spot soybean meal slips by 10-20 yuan/tonne. Therefore, cottonseed meal prices are curbed by these factors. But the prices of cottonseed remain high, so cottonseed meal prices are resistant against dropping under the support of costs. In a hybrid of a bull and a bear, short-term cottonseed meal may be flat relatively. And buyers can stay on the sideline and make small replenishment upon low and stable prices.

(USD $1=CNY 7.05)