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Daily Review on Meal Market in China--4/3/2020

2020-03-04 www.cofeed.com
Today (Mar. 4), the market for meals in China is shown as follows:

Soybean meal: The US Federal Reserve announced to cut its benchmark interest rates by 50 basis points in an emergency move to protect the economy from the negative impact of the coronavirus outbreak. And Argentina was set to raise soybean export tax to 33% from 30% currently, which was favourable to bolster the prospect of US exports. With active technical buying adding to that, US soybean futures extended gains last night. But meal futures swing slightly on the Dalian Commodity Exchange today. Soybean meal spot prices steadily go ups and downs by 10-20 yuan/tonne, and the trading is not as good as yesterday still with some low-level replenishment. Specifically, the price settles at 2740-2920 yuan/tonne today. (Tianjin 2920, Shandong 2890-2900, Jiangsu 2820-2840, Dongguan 2740-2770, and Guangxi 2750-2780.) Chinese oil mills are still purchasing South American soybeans due to handsome crush margins on the DCE. Soybean arrivals at domestic ports are forecast to reach 24.3 mln tonnes from April to June. Moreover, under the spreading of the epidemic across many countries, the decline in demand for meat products will also affect the breeding. And the demand from aquaculture is typically slack under cold weather. Therefore, there is limited space for a rise in soybean meal prices. But farmers are active making hog replenishment on consideration of current considerable margins, so from a long-term perspective, the demand for soybean meal will increase with a pickup in hog amount. And as more than 80% of feed enterprises have resumed work, the demand for soybean meal is expected to move higher. In conclusion, it will take time to abate the tight supply in soybean meal market, so prices will probably maintain a strong trend in March. 

Imported rapeseed meal: Imported rapeseed meal price rises today, of which it partly settles up 10-20 yuan/tonne at 2,290-2,390 yuan/tonne in coastal areas (Guangxi 2,300, flat; Guangdong not offered; Fujian 2,370). Rapeseed is in short supply amid continuous tensions between China and Canada, so the operation rate in oils mills is low, which leads rapeseed meal stocks to stay at a low level. Besides, most oil mills have no spot soybean meal for sale, and soybean arrivals in March are lower. Moreover, more than 80% of downstream feed enterprises have returned to work. Thus, rapeseed meal prices are boosted. But due to the considerable crush margin of Brazilian soybean futures, soybean arrivals from April to June will likely be as high as 24.30 mln tonnes. In addition, the demand for meats goes down on account of the spread of the novel coronavirus epidemic worldwide, which will also affect breeding industry. Also, the demand from aquaculture has been in a slack season. Thus, the upward space of rapeseed meal price will be curbed. Buyers had better not chase up prices too excessively.

Imported fishmeal: Imported fishmeal prices are stable with a partial decline of 100-300 yuan/tonne today and can be traded through negotiation. Peruvian Standard SD with 65% protein content is 11,500-12,000 yuan/tonne; Peruvian higher-quality SD with 65% protein content is 11,900-12,300 yuan/tonne; Peruvian higher-quality SD with 67% protein content is 12,300-12,900 yuan/tonne; and Peruvian Super Prime SD with 68% protein content is 12,900-13,100 yuan/tonne. Currently, the consumption of fishmeal is slow, so the demand is dismal when downstream buyers are taking hand-to-mouth buying. Port stocks are hard to digest, while fresh goods are arriving at ports, so total stocks are rising at ports. Traders are under pressure and cutting prices to attract purchases, which is bearish to the market. But according to market sources, new fishmeal is of higher quality, so traders are trying to prop up the price, which may limit its declines. Overall, fishmeal market is predicted to be steady in the near term. Stocks at port: Huangpu 60,000 tonnes, Fuzhou 30,000 tonnes, Shanghai 35,000 tonnes, Tianjin 1,000 tonnes, Dalian 13,000 tonnes, Fangchenggang 1,000 tonnes and 4,000 tonnes at other ports. FOB quotes from foreign merchants today: It is quoted steadily at 1,450 USD/tonne for Peruvian Standard with 65% protein content and 1,750 USD/tonne for Peruvian super with 68% protein content. Chilean Standard with 65% protein content is quoted steadily at 1,420 USD/tonne, and super with 68% protein content at 1,720 USD/tonne.

Cottonseed meal: Cottonseed meal prices are stable today. More than 80% of feed enterprises have returned to work. And many cottonseed oil factories have back orders. Accordingly, cottonseed meal is in low inventory, which is likely to bring its market support. But the demand for cottonseed meal is limited by an inversion of price spread between soybean meal and it. Also, the novel coronavirus epidemic is spreading around the world, lowering demand for meats and affecting breeding industry, thereby the demand outlook of meals is also worrisome. Consequently, cottonseed meal market is curbed, and there may be not big fluctuations in a short term.

(USD $1=CNY¥6.95)