1. Price Trend
The soybean meal commodity index on December 11 was 90.03, which was the same as yesterday. It is 35.64% lower than the highest point of the cycle at 139.88 points on September 4, 2012 and is 23.26% higher than the low point of 73.04 points on April 10, 2016 (Note: Period refers to September 1, 2011 to present).
According to data from SunSirs, Since November, compared with the great rise and fall of soybean oil, the ups and downs of soybean meal appears to be calm and the price continues to weaken. Up to December 11, after the first rise of soybean oil, the average market price reached to 6,630 RMB/ton, which was an increase of 2.05% from the beginning of December and an increase of 1.79% from the beginning of November. Unlike the rise trend of soybean oil prices, soybean meal prices continued to fall. The average price of 43% soybean meal was 3,000 RMB/ton, which was 2.49% lower than in early December and 5.06 lower than in early November.
2. Market Analysis
Beginning in November, with being pulled up by the strong strength of palm oil, soybean oil has been repeatedly risen and fallen. Soybean meal, which is another downstream product of soybeans, has not been boosted due to its low demand. In December, due to the tight supply of imported soybean, the start-up rate of soybean oil plants fell, and soybean oil stocks fell below 1 million tons, which is defined as at a low level. On December 9, soybean oil once again ushered in a sharp rise in prices. Although the price on December 11 has a slightly down, the overall still rose more than 2%. And soybean meal continues to be weak.
The main reason is that since November, the price of terminal live pig has slumped. This slumping price promotes farmers to concentrate sell the live pigs in the market. Soybean meal demand is not good and the rise is weak. The prices continue to fall. Soybean oil plants are mainly focusing on increasing soybean oil price, lacking confidence in soybean meal, and prices are gradually falling. Since December, pig prices have ushered in a rebound. Farmers are more bullish. In addition, the New Year's Day is approaching. Farmers are very price-conscious and trying to increase the live pig prices. They start to squeeze the bar. Soybean meal demand rebounds and the price decline slows down. The November live pig inventory data rebounded for the first time, supporting the price of soybean meal to stop falling and stabilize.
Industrial chain: According to data from 400 fixed monitoring station in counties within China by the National Ministry of Agriculture and Rural Areas, in November, the live pig inventory increased by 2% month-on-month, and it rose for the first time since November last year. The fertile sow inventory increased by 4% month-on-month, and it has been rising for 2 months.
In November, sampling from over 5,000 pig farm nationwide, the annual growth rate of live pigs and fertile sows increased by 1.9% and 6.1 respectively. And the annual growth rate of both has an 1.4% average increase since October and has continued to increase for three months. The production and sales of pig feed continued to increase. Based on full coverage of feed production enterprises across the country by SunSirs, the output of pig feed has increased by 6.9% month-on-month in November.
Data: The US Department of Agriculture (USDA)’s December supply and demand report shows that US soybean meal exports in 2019/20 are estimated at 13.2 million tons. And in November, it is estimated at 13.35 million tons. US 2019/20 soybean meal ending stocks are estimated at 400,000 tons, compared with 400,000 tons in November. The US soybean meal output for 2019/20 is estimated at 49.498 million tons, compared with 49.498 million tons in November (Note: 1 ton = 907.2 Kilogram).
3. Marketing Forecasting
Li Bing, an agricultural product analyst at SunSirs, believes that although the pig inventory has picked up and terminal demand has improved, soy meal is expected to stop falling and stabilize in the short term. In the long term, it is still difficult to be optimistic. Pigs will be concentrated in the market after the year. Soy meal demand will decline sharply. There is still the possibility of a fall.
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