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Daily Review on Meal Market in China--8/1/2020

2020-01-08 www.cofeed.com
Today (Jan. 8), the market for meals in China is shown as follows:

Soybean meal: US soybean futures fell last night as investors squared positions ahead of a U.S. Department of Agriculture (USDA) supply and demand report for January, in addition to crop-favorable rain in South America. And meal futures fall after lower opens on the Dalian Commodity Exchange today. Soybean meal spots partially dropby 10-20 yuan/tonne in tepid trading. Specifically, the price settles at2680-2810yuan/tonne today. (Tianjin 2810, Shandong 2750-2780, Jiangsu 2700-2750, Dongguan 2680-2700, and Guangxi 2680-2720.) Due to huge soybean imports and good crush margins, mills now keep operation rates at a very high level, so soybean meal stocks in coastal regions continued to increase by 13% to 590,000 tonnes last week, with some Guangdong mills even suspending production due to swelling stocks. On the other, hog breeding will enter into a slack state for a while after farmers hurry to ell hog ahead of the Spring Festival, so feed enterprises have postponed and cut replenishment compared to that in previous years for a lack of confidence in the market. In addition, funds keep on buying oils bolstered by firm oil market, which is also weighing down soybean meal prices. But according to data by China’s Ministry of Agriculture, sow stocks saw a month-on-month rise of 2.2% in December, which marks a 3rd consecutive growth and a 7% rise against September; poultry meat production increased by over 15% or about 3 mln tonnes in December, which rarely happens over the years; and egg production also rose by 5.7%. The demand for hog feed has been recovering, and the decline has also been offset by the growth in poultry feed. The demand is forecast to recover to a large extent after May this year at current pace. Overall, short-term soybean meal prices will steadily keep choppy, range-bound, and buyers can wait for low and stable prices to make appropriate replenishment. 

Imported rapeseed meal: Imported rapeseed meal prices are stable with a slight rise, of which it partially settles up 10-20 yuan/tonne at 2,240-2,380 yuan/tonne in coastal areas (Guangxi 2,240; Guangdong 2,240; Fujian 2,250). The supply of rapeseed is still tight amid tensions between China and Canada, so the operation rate is lower, and oil mills prop up prices. But soybean crush has maintained an extremely high level in recent three weeks on account of huge imports and considerable crush margins. Moreover, the demand for meals turns light in a slack season of aquaculture in South China, resulting in increasing inventory of soybean meal and rapeseed meal last week. Therefore, the price rises of rapeseed meal are limited, and short-term market is predicted to keep fluctuating at a narrow range.

Imported fishmeal: Imported fishmeal prices steady with a partial rise of 100 yuan today. Peruvian Standard SD with 65% protein content is 10,400-10,600 yuan/tonne; Peruvian higher-quality SD with 65% protein content is 10,700-10,900 yuan/tonne; Peruvian higher-quality SD with 67% protein content is 11,200-11,600 yuan/tonne; and Peruvian Super Prime SD with 68% protein content is 11,500-11,800yuan/tonne. In addition to worsening fishing state, the Peruvian government has set a fishing ban for an infinite period in some seas areas. Meanwhile, some domestic traders now have limited supply and are awaiting for higher prices. But the demand for fishmeal is slack due to the end of aquaculture in winter and lower hog stocks. Stocks at port: Huangpu 84,000 tonnes, Fuzhou 31,000 tonnes, Shanghai 34,000 tonnes, Tianjin 1,000 tonnes, Dalian 6,000 tonnes, Fangchenggang 1,000 tonnes and 4,000 tonnes at other ports. FOB prices from foreign merchants today: it is quoted steadily at 1,380 USD/tonne for Peruvian Standard with 65% protein content and 1,680 USD/tonne for Peruvian super with 68% protein content. Chilean Standard with 65% protein content is unchanged at 1,200 USD/tonne, and super with 68% protein content at 1,510 USD/tonne.

Cottonseed meal: Cottonseed meal price stays stable with some declines of 30 yuan/tonne today. The poor demand is affected by narrow price spread between soybean meal and rapeseed meal, and downstream enterprises are not active in stocking up goods. In addition, meals on DCE today fall back with low opens, and partial spot soybean meal down by 10-20 yuan/tonne. Accordingly, cottonseed meal market is weighed down by these factors. But cottonseed is pricey, so the cost limits price declines. Therefore, short-term market is predicted to go on fluctuating to adjust. Buyers can make replenishment in small batches upon low and stable prices.

(USD $1=CNY 6.95)