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Daily Review on Meal Market in China--6/12/2019

Today (Dec. 6), the market for meals in China is shown as follows:

Soybean meal: China’s Ministry of Commerce said that tariffs should be lowered accordingly if the two sides reach a phase one deal, but US President Donald Trump insisted that trade talks are “moving right along”, and trade negotiators at the deputy level held a phone talks on Wednesday evening. As both sides are working hard to reach a deal, in addition to tight global supply in soybean meal, US soybean futures rose further last night. And meal futures also move higher on the Dalian Commodity Exchange. Spot soybean meal prices increase by 10-30 yuan/tonne to attract more purchases at low levels. Specifically, the price settles at 2,830-3,010 yuan/tonne today. (Tianjin 3,010, Shandong 3,010-3,030, Jiangsu 2,910-2,940, Dongguan 2,840-2,860, and Guangxi 2,840-2,850, Fujian 2,880-2,910.) Operation rates in Shandong and east China drop lower than expected, so it still takes some time for soybean meal to ease its tight supply. The rise in hog prices has again attracted farmers to increase replenishment and to stall sales, in addition to upcoming peak demand for the New Year’s Day and the Spring Festival, so mills are propping up prices, boosting a rally in price. But due to good crush margins on the DCE and alternative meal imports arriving at ports recently, spot soybean meal prices have seen negative basis in Guangdong, which helps limit declines in price. Overall, short-term soybean meal will rebound in fluctuations, and buyers can make appropriate replenishment on the dips. 

Imported rapeseed meal: Imported rapeseed meal price keeps stable today, of which it settles at 2,180-2,300 yuan/tonne (Guangxi 2,280; Guangdong not offered; Fujian not offered). The supply of rapeseed is tightening amid tensions between China and Canada, so oil mills reduce the operation rate. In consequence, the stock of rapeseed meal also tends to decrease, and oil mills have a strong will to raise prices. But China are active in purchasing imported soybeans due to the good crush margins of futures, and oil mills are willing to improve the operation rate, triggering a rally in soybean meal inventory. Besides, mixed meals arrive at ports intensively and aquaculture in Southern area is entering into a slack season, which limits the upward space of rapeseed meal price. Thus, short-term rapeseed meal price mainly fluctuate at a narrow range. Buyers are suggested to make proper replenishment on the dips and not to drive up prices excessively.

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 quota released by the Peruvian government, especially as fish catches get accelerating at present. 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 with the coming of the New Year’s Day, buyers will soon carry out restocking. Overall, fishmeal market is predicted to keep steady to strengthen in the near term. Stocks at port: Huangpu 97,000 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 several declines of 40 yuan/tonne today. The price of cottonseed meal is depressed by poor demand affected by soybean meal and cottonseed meal; lack of rigid demand under a slack season of aquaculture in Southern area; thin trade of cottonseed meal. However, the cottonseed is pricey. And meals on DCE today also rise, and spot soybean meal increases by 10-30 yuan/tonne. Thus, cottonseed meal is resistant against dropping under the two factors. In a hybrid of a bull and a bear, short-term cottonseed meal may be flat relatively. Buyers can make replenishment in small batches upon low and stable prices.

(USD $1=CNY 7.04)