Market activity for protein meal products was mixed on Wednesday.
CBOT soybeans closed lower, pressured by favorable U.S. weather forecasts which improved yield prospects. However, renewed tensions in the Middle East lifted soybean oil prices, limiting the decline in soybeans. The Brazilian Grain Association projects the country's soybean exports for June to reach 12.36 million metric tons, a decrease from 13.79 million tons during the same period last year. In the domestic market, protein meals traded within a narrow range. Physical market sentiment remains subdued, but improved crushing margins for imported soybeans are expected to boost crushers' purchasing interest. On the supply side, inventories for both soybeans and soybean meal are rising, while end-user procurement has slowed, indicating no immediate supply concerns for domestic soybean meal. A sharp decline in soybean meal prices appears unlikely, with a continuation of range-bound trading being the most probable scenario. The suggested strategy is to take a short-term long position in the futures market.
Palm Oil and Vegetable Oils
BMD crude palm oil futures advanced on Wednesday, touching a four-week high, supported by strength in U.S. soybean oil. However, profit-taking activity capped the gains. Malaysian palm oil prices rose after the holiday, buoyed by higher crude oil prices due to Middle East tensions and strength in U.S. soybean oil and Canadian canola. Statistics Indonesia reported that the country's exports of crude and refined palm oil from January to April increased by over 20% year-on-year. Domestically, canola oil led the gains, breaking through the 10,000-yuan-per-ton level with increased open interest, while palm oil followed higher. Concerns over global rapeseed production, coupled with limited domestic canola oil supply, are driving prices for that contract. Malaysia is fully implementing its B12 biodiesel mandate, with some regions moving to B15. Indonesia has postponed the official implementation of its domestic market obligation (DMO) policy for exports from September 1st to December 1st, easing market concerns. In contrast, soybean oil remains the most amply supplied among the oils, both from a cost and fundamental perspective. The recommended strategy is to take long positions in palm oil and canola oil contracts.
Live Hogs
Trading activity for the September hog futures contract increased on Wednesday, with open interest rising and prices moving higher rapidly. The national average price for ternary crossbred hogs was 9.55 yuan/kg, down 0.03 yuan/kg from the previous day. The lowest price was 9 yuan/kg in Guizhou, while the highest was 10.50 yuan/kg in Guangdong (excluding Hainan). According to Mysteel data from key breeding enterprises, the national daily slaughter volume on June 3rd was 281,200 head, an increase of 2.53% from the day before. However, downstream product movement remains slow, and slaughterhouses show low purchasing enthusiasm. The national average slaughter weight for ternary hogs was 122.94 kg, unchanged from the previous working day. Overall, the July contract is being weighed down by the weak physical market, with its premium narrowing as prices follow spot lower. The September contract is adjusting under pressure as breeding losses widen for farmers. Against this backdrop, the Ministry of Agriculture and Rural Affairs issued the "Implementation Plan for Comprehensive Hog Production Capacity Regulation (2026 Revision)" in May. This revised plan, considering factors like pork market supply and demand and improvements in production efficiency, sets the national target for the normal inventory of breeding sows at around 37.5 million head. This marks another reduction in the target from the level set in February 2024, indicating an intensification of national-level measures to reduce breeding capacity. Market expectations are that data showing a reduction in heavy hog slaughter, a positive development, may materialize by July. This has boosted activity in the deferred September 2609 contract, with prices catching up and moving higher.
Eggs
Egg futures were mixed on Wednesday. The main July 2607 contract traded in a tight range at elevated levels, closing down 0.07% at 4,401 yuan per 500 kg. The August 2608 contract saw a more pronounced pullback from highs, closing down 0.92% at 4,727 yuan per 500 kg. In the physical market, data from SCI99 shows the national average egg price was 5.28 yuan/jin yesterday, up 0.01 yuan/jin. In producing areas, pink-shell egg prices in Ningjin were 5.15 yuan/jin, while brown-shell egg prices in Heishan were 5 yuan/jin, both flat from the previous day. In consumption areas, brown-shell egg prices in Puxi were 5.35 yuan/jin, up 0.11 yuan/jin, and prices in Guangzhou were 5.65 yuan/jin, up 0.1 yuan/jin. Prices in producing areas are likely to remain mostly stable, while procurement costs in consumption areas are also steady. Downstream purchasing interest is acceptable, leading to price rebounds in most consumption areas. The July contract is experiencing high-level consolidation supported by physical prices, while the August contract has retreated for two consecutive sessions. Market participants are advised to monitor recent spot price movements and market sentiment closely, remaining vigilant for potential corrections from current high levels.
Corn
Corn futures faced downward pressure on Wednesday, weighed down by bearish news regarding auctions of imported corn, with policy factors dominating short-term price action. In the Northeast, corn prices continued to weaken, though traders showed limited urgency to sell, and downstream buyers were not highly active either. Feed mills in southern consumption regions are mostly adopting a wait-and-see approach regarding the use of aged rice from state reserves in the Northeast, anticipating new-crop supplies. This is temporarily restraining corn demand, and prices are expected to remain under pressure in the near term. In North China, corn prices also trended lower. The arrival of the new wheat crop, with prices coming in below market expectations, exerted additional downward pressure on the corn market. This prompted increased selling from traders, while downstream users, holding sufficient inventories, continued to press for lower purchase prices. Market attention is focused on the progress of the new wheat harvest. Prices in consumption regions were mostly stable with localized weakness. In the Northeast producing region, remaining old-crop stocks are dwindling, and traders, with relatively high holding costs, are reluctant to sell, which limits the potential for a deep price decline. However, ongoing competition from alternative grains continues to suppress the corn market, with feed mills purchasing only in small lots as needed, reflecting weak underlying demand. Overall, the continuous release of corn from state reserves and the increasing supply from the new wheat harvest are creating ample market supply, leading to a weak price trend for corn.
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