Today (Jan 4), the market for meals in China is shown as follows:

Soybean meal: U.S. soybean futures closed higher at a six-and-a-half-year high last Thursday, and meal futures also continue rising on China’s Dalian Commodity Exchange today. Spot soybean meal prices go up 50-80 CNY from last Thursday to 3,370-3,500 CNY/tonne in coastal regions, and the market is expected to stay in thin trade as buyers are cautious in chasing after higher prices. (Tianjin 3500, Shandong 3430-3500, Jiangsu 3420-3520, Dongguan 3370-3400, and Guangxi 3400-3450.)

U.S. soybean futures broke the $13 level to hit a six-and-a-half-year high, so import cost remains stubbornly high. Gross margins for U.S. Gulf soybeans for Dec-Feb shipment are 18-148 CNY/tonne on Dalian at present, and if deducting 150-180 CNY/tonne of processing fee, net crush margins are still at loss. However, supply tensions have been eased in Shandong Province as oil mills are working at high operation rates under huge soybean stocks. Moreover, aquaculture has been off-season in winter, and poultry stocks are low due to previous breeding loss, coupled with a cluster year-end sales of pigs and a slow recovery in hog breeding capacity, so downstream buyers become cautious and soybean meal market stays in thin trade, especially under high-level prices. Some domestic oil mills have suspended production due to swollen meal inventories, especially in south western regions. And Dalian meal futures have narrowed down gains in afternoon trade. But sharp rises in U.S. soybean prices is lending support to import cost, so domestic soybean meal prices will keep strengthening on the whole.

Imported rapeseed meal: U.S. soybean rose to its highest last Thursday over the past six and a half years. Meal futures extend gains on China’s exchanges today. Spot rapeseed meal is offered at 2,710-2,800 CNY/tonne in coastal China today, an advance of 10-40 CNY/tonne, in tepid trade.

Net crush margins for soybean futures have been negative as the cost of importing soybean remains high. Soybean crush has declined by 9% to 1.70 mln tonnes. Soymeal prices go strengthening, which also boosts rapeseed meal price. Nevertheless, aquaculture has basically ceased, and poultry stocks are low attributed to substantial losses in breeding margins. Moreover, hog capacity slows down on account of intensive hog slaughter ahead of the Lunar New Year, slackening demand for feed. In this case, rapeseed meal is still in subdued trade, leading to a rise in its inventory. Rapeseed meal stocks in coastal regions have risen 74% to 34,000 tonnes. Dominated by high cost brought by elevated US soybean prices, it is predicted that short-term rapeseed meal price will still stay strong.

Imported fishmeal: Imported fishmeal prices are stable today and can be traded through negotiation. Peruvian Standard SD with 65% protein content is 10,000-10,200 CNY/tonne; Peruvian higher-quality SD with 65% protein content is 10,400-10,700 CNY/tonne; Peruvian higher-quality SD with 67% protein content is 11,000-11,100 CNY/tonne; and Peruvian Super Prime SD with 68% protein content is 11,500-11,600 CNY/tonne. Fishmeal cargo arrivals are affected by the coronavirus pandemic, so stocks are low at domestic ports and traders have some sentiment to prop up or raise prices. But the demand for fishmeal is subdued as aquaculture turns slack in winter and the recovery in hog herd is limited now, so feed manufacturers tend to take hand-to-mouth buying at present, which is capping the upward space in domestic fishmeal market. Overall, domestic fishmeal prices are expected to steady with slight adjustments in the near term.

Stocks at ports: Dalian 5,500 tonnes, Tianjin 600 tonnes, Shanghai 16,000 tonnes, Huangpu 53,000 tonnes, Fuzhou 11,400 tonnes, Fangchenggang 1,050 tonnes and 2,200 tonnes at other ports.

FOB quotes from foreign markets today: Dec/Jan shipments are quoted at 1,310 USD/tonne for Peruvian Standard with 65% protein content and at 1,530 USD/tonne for Peruvian super with 68% protein content. Chilean Standard with 65% protein content is quoted steadily at 1,370 USD/tonne, and super with 68% protein content at 1,600 USD/tonne.

Cottonseed meal: Cottonseed meal prices mostly increase by 50-150 CNY/tonne in China today. Soybean futures soared to a six-and-a-half-year high on CBOT last Thursday. Meal futures continue rising on China’s Dalian Commodity Exchange today. And spot soybean meal rises by 50-80 CNY/tonne in coastal regions. Net crush margins for soybean futures have been negative as the cost of importing soybean remains high after U.S. soybean prices broke the 1,300 level. In this case, soyoil mills have intention to lift prices, giving a boost to soybean meal price. On the other side, cottonseed crush remains low due to its high cost, which pushes cottonseed meal price up as well. However, aquaculture has basically ceased, and hog capacity recovery also slows. And downstream buyers are cautious as soybean meal prices climb to high levels. Moreover, cottonseed meal market is also in thin trade. Driven by high cost, cottonseed meal market still keeps strengthening in a short term.

(USD $1=CNY ¥6.54)