Protein Meal: CBOT soybeans rose on Tuesday, supported by a weaker U.S. dollar. Soybean meal futures declined, while soybean oil futures advanced. The Brazilian National Association of Grain Exporters indicated that Brazil's soybean exports for January are projected to be 3.23 million tons, lower than the earlier estimate of 3.79 million tons. Concurrently, market participants are monitoring the dry weather conditions in Argentina. Global soybean export prices have softened, with Brazilian soybeans quoted at $416 per ton FOB, compared to U.S. soybeans at $436 per ton. Domestically, protein meal prices exhibited a firm, oscillating trend. A broad rally in commodity markets, coupled with pre-holiday restocking demand, provided upward momentum to futures. However, spread trading involving buying oils and selling meals capped the gains in protein meal contracts. Pre-holiday basis levels remain robust. The strategy suggests a bear spread for the May-September contracts, with a view that the market will maintain a firm, albeit volatile, tone. A short strangle strategy is recommended.
Oils and Fats: BMD palm oil futures climbed on Tuesday, tracking gains in related markets. Support was derived from encouraging export figures and declining production data. High-frequency data showed that Malaysian palm oil exports for January 1-25 increased by 7.97% to 9.97% compared to the previous month. Over the same period, production fell by 14.81% month-on-month. Based on these trends, Malaysian palm oil inventories for January are estimated to potentially drop below 2.9 million tons. In the domestic market, vegetable oil futures prices advanced, led by palm oil, with soybean oil and rapeseed oil following suit. The market experienced sequential long liquidation and short covering. Rising import costs and the general uptick in commodity prices fueled bullish sentiment. Procurement of near-month shipments for soybeans, rapeseed, and palm oil is ongoing, which supports domestic supply security but exerts downward pressure on basis levels. The oils and fats complex faces mixed influences, with no significant spot-future arbitrage contradictions, leading to a firmly consolidating price trend. The strategy recommends selling put options.
Live Hogs: Live hog futures traded with a weak bias on Tuesday. The main March 2603 contract opened and trended lower, closing down 1.57% at 11,285 yuan/ton. Pre-Spring Festival restocking demand provided support to nearby contracts. Zhuochuang data indicated that China's average daily hog price yesterday was 12.7 yuan/kg, down 0.12 yuan/kg from the previous day. The price in the benchmark delivery region of Henan remained flat at 13.1 yuan/kg, while prices in Sichuan, Shandong, Guangdong, and Liaoning fell to varying degrees. Hog producers are increasing their sales pace, leading to a rise in supply. However, demand跟进 is only moderate, creating a supply-demand imbalance that is pushing prices lower. With the pre-holiday stocking period nearing its end and producers keen to sell, spot hog prices are undergoing a correction. While the futures market currently shows weakness, the underlying trend of herd reduction remains intact. Short-term intraday selling is advised. Monitor the pace of herd reduction and watch for long opportunities in deferred contracts once the current price correction runs its course.
Eggs: Egg futures were weak and oscillating on Tuesday. The main March 2603 contract pulled back, closing down 0.72% at 3,047 yuan/500 kg, while deferred contracts continued their soft performance. In the spot market, Zhuochuang data showed the national average egg price was 3.94 yuan/jin yesterday, up 0.08 yuan/jin. In producing areas, pink-shell eggs in Ningjin were 4.0 yuan/jin, up 0.1 yuan/jin, while brown-shell eggs in Heishan were 3.6 yuan/jin, also up 0.1 yuan/jin. In consumption areas, brown-shell eggs in Puxi held steady at 4.07 yuan/jin, while those in Guangzhou rose 0.07 yuan/jin to 4.05 yuan/jin. End-users are purchasing based on immediate needs, with downstream procurement activity normal. Arrivals at major sales markets decreased compared to the previous day, supporting the rise in spot egg prices. Short-term, pre-holiday stocking continues to underpin spot prices. However, from a medium-to-long-term perspective, recovering breeding profits are boosting producers' willingness to replenish flocks while reducing culling intentions, which is unfavorable for capacity reduction. If this trend persists, future supply will continue to pressure egg prices. It is recommended to exit long positions and adopt a wait-and-see approach, anticipating future opportunities in deferred contracts. Closely monitor changes in producers' culling and replenishment intentions, as these will impact future supply.
Corn: Corn futures saw reduced positions and moved lower on Tuesday, with funds rotating into the May contract. Nearby contracts led the decline, while deferred contracts followed with adjustments. Currently, purchase prices in northern ports are relatively high, and the number of trucks arriving at ports is adequate, providing some support to the market. Acquisition prices by deep-processing enterprises in producing regions are also elevated, offering further price support. Corn prices in North China are stable to firm, though the upside is limited. The pace of sales by farmers has accelerated somewhat, yet the overall sales progress remains slower than the same period last year. Traders show moderate willingness to acquire and build stocks of high-quality corn. Downstream enterprises face limited pressure to build inventories; their pre-holiday procurement rhythm is steady, with a slight increase in purchasing volume. Corn prices in consumption areas are temporarily stable. Port traders are quoting firm prices, with transactions occurring mainly for rigid demand and allowing for minor negotiations. As downstream stocking approaches its conclusion, market activity is declining. Technically, for the main contract, focus remains on the price action around the key 2,300 yuan psychological level. Short-term longs should consider setting dynamic profit-taking stops, with a medium-term outlook of continued range-bound movement.
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