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

Soybean meal: U.S. soybean futures rallied on Tuesday on concerns over weather in South America where soybean harvest was lagging the pace of last year in Brazil and scattered rains forecast in Argentina was inadequate to bring a relief to crops under pressure. Meal futures also open high and rise on China’s Dalian Commodity Exchange today. Spot soybean meal prices go up 40-80 CNY to 3,370-3,570 CNY/tonne in coastal regions, attracting some low-level and forward-month purchases with less trade in cautious mood. (Tianjin 3570, Shandong 3515-3540, Jiangsu 3470-3490, Dongguan 3370-3390, and Guangxi 3410-3460.)

Import cost of soybeans remains stubbornly high. Gross margins for U.S. Gulf soybeans for Jan-Feb shipment are 107 CNY/tonne on Dalian at present, and if deducting 150-180 CNY/tonne of processing fee, net crush margins are still at loss. And domestic soybean meal market was in strong trade on Monday and Tuesday with the start of stocking up for the Chinese Lunar New Year, indicating that mid-and-downstream buyers were pressurized into accepting high-level prices. And mills still hold strong sentiment to hike prices. These combine to shore up meal prices. Albeit slow terminal consumption, soybean meal market is predicted to keep an uptrend in fluctuation on the drive of cost side, as U.S. soybean prices keep rising on a weaker U.S. dollar, an inflation expectation and concerns over weather in South America.

Imported rapeseed meal: Brazilian soybean harvest has been in slower pace compared to the same period last year. Weather forecast calls for absent rainfall in Argentina in the future which is not enough to ease pressure faced by crop development. And dry condition in South America is still worrisome. U.S. soybean futures jumped higher overnight underpinned by these factors above. Meal futures also post further gains after high opening on China’s exchanges today. Spot rapeseed meal is offered at 2,680-2,760 CNY/tonne in coastal China today, an increase of 10-20 CNY/tonne, in tepid trade.

Net crush margins for soybean futures have been negative due to high import cost, so soybean meal price stays strong, which boosts rapeseed meal price as well. But soybean crushing mills will pick up the operation rate over the next two weeks on adequate supplies. Nevertheless, aquaculture has basically ceased, and poultry stocks are low attributed to substantial losses in breeding margins. What’s more, hog capacity recovers more slowly on account of intensive slaughter ahead of the Lunar New Year. In this case, feed consumption slows down, and oil plants urge the deliveries. As a result, soybean meal and rapeseed meal stocks ramp up, limiting the upside of rapeseed meal. Dominated by high cost based on the strength on U.S. soybean prices, it is predicted that short-term rapeseed meal price will remain at high levels.

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. Domestic fishmeal stocks keep falling at present as imported cargoes are affected by the coronavirus pandemic across the globe and on the stocking up for the Chinese Lunar New Year, so 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, 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 5,000 tonnes, Tianjin 580 tonnes, Shanghai 15,000 tonnes, Huangpu 52,000 tonnes, Fuzhou 11,700 tonnes, Fangchenggang 1,060 tonnes and 2,400 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 stay stable with a partial increase of 50-100 CNY/tonne in China today. U.S. soybean futures surged on Tuesday on worrying weather condition in South America. Meal futures also post further gains after high opening on China’s Dalian Commodity Exchange today. And spot soybean meal increases by 40-80 CNY/tonne in coastal regions. Net crush margins for soybean futures have been negative as the cost of importing soybean stays high. And traders have begun stocking up ahead of the Lunar New Year, so soyoil mills have intention to lift prices, giving a boost to soybean meal price. Besides, cottonseed crush remains low due to its high cost, which buoys cottonseed meal price as well. In addition, aquaculture has basically ceased, and hog capacity recovery also slows. Moreover, cottonseed meal market is also in thin trade. Driven by high cost, the overall cottonseed meal market still keeps strengthening in a short term.

(USD $1=CNY ¥6.46)