Corn: Neutral
1. Market Focus: On June 2, the minimum purchase price rice auction (non-directional) planned to sell 601,155 tons, but only 43,995 tons were actually transacted, resulting in a clearance rate of 7.32% and an average transaction price of 2,706 yuan per ton. The substitution advantage of brown rice for feed corn is very limited. Currently, high-cost traders in the Northeast production region are already facing losses and are reluctant to sell, while the North China production region is accelerating sales to clear warehouses for wheat harvest. Corn is expected to continue facing downward pressure in June.
2. Summary View: Bearish factors are being fully realized, with nearly ten million tons of sprouted wheat still needing to be absorbed. A wait-and-see approach is recommended.
Soybean Meal: Neutral to Bearish
1. Favorable weather prospects in North America and a lack of procurement signals from China led to a continued decline in CBOT soybeans overnight. Concurrently, progress in the Israel-Lebanon ceasefire has reduced geopolitical risk premiums, with WTI crude oil falling over 4% overnight, also weighing on the agricultural commodities sector. From the perspective of the U.S. soybean balance sheet, adjustments to planted acreage at the end of the month and whether Chinese procurement materializes remain two key variables. Regarding the latter, any large-scale domestic procurement is expected to push ending stocks back below 300 million bushels, thereby providing support to the U.S. market.
2. As of June 2, drought coverage in U.S. soybean production regions was 28%, a weekly increase of 1 percentage point. Newly affected areas compared to last week were mainly concentrated in northern Illinois. Weather forecasts indicate that cumulative rainfall in the core Corn Belt and southern regions is expected to reach 35-65 mm over the next week, while precipitation in the Plains will be relatively lower, with a weekly cumulative total expected to be less than 15 mm. Maximum temperatures in production areas generally range from 27°C to 32°C, with overall weather conditions favorable for early soybean growth.
3. The domestic market faces a dual weakness in both current conditions and expectations. On the current front, against the backdrop of high soybean arrivals and high operational rates at oil mills, soybean meal supply is relatively ample, continuing to pressure spot prices and basis performance. On the expectation front, the DCE soybean meal contract is anchored to cost-side pricing, and the sustained correction in the U.S. market is also weighing on soybean meal valuations. Concurrently, changes in Brazil's CNF quotations warrant attention.
Summary View: The market is expected to trade weakly intraday, with attention on the performance of the September contract near the 2,900 yuan per ton level.
Eggs: Bearish
Spot prices in major production areas have declined. The spot quote in Guantao, Hebei, is 4.82 yuan per jin, down 0.09 yuan per jin from the previous day. Spot prices are showing signs of stalling at high levels, and the main front-month contract 2607 has seen significant position reductions. Looking ahead, the market is expected to maintain strong, volatile trading at high levels in the short term during early June, with pressure from long profit-taking intensifying. In the medium term, with the arrival of the rainy season in mid-to-late June, storage difficulty will increase and group catering demand will decline, potentially leading to a phased correction in spot prices and a technical adjustment in the futures market.
Summary View: Spot price expectations have softened slightly. For deferred contracts, consider establishing short positions at higher levels, betting on pressure from capacity release.
Hogs: Neutral to Bearish
Spot hog prices are fluctuating within a narrow range. The average spot price in major production regions was 9.55 yuan/kg yesterday, down 0.01 yuan/kg from the previous day. Deep losses in farming continue, leading to intensified involuntary culling. The drive for futures-spot convergence has caused a significant adjustment in the nearby July contract. From a fundamental perspective, the pressure on nearby contracts mainly stems from ample supply in the spot market coupled with the off-season for consumption. Regarding the supply rhythm, hog slaughter weights have declined for three consecutive weeks. According to current data, the national average hog slaughter weight is 124.99 kg, down 0.16 kg week-on-week, marking the third consecutive weekly decline. This reflects ongoing destocking efforts by producers, with the market entering a phase of concentrated sales of previously held-back hogs and secondary-fattened hogs ahead of the Dragon Boat Festival.
Summary View: Focus on basis trading for nearby contracts. For deferred contracts in the medium to long term, consider establishing long positions at low levels within a lower range.
Risk Disclosure: This information is prepared by the analyst team of the futures company's Research & Development Department. The information herein is sourced from publicly available materials. While efforts are made to ensure accuracy and reliability, no guarantee is made regarding its accuracy or completeness. Trading based on this information is at one's own risk. This report does not constitute personal trading advice, nor does it consider the specific trading objectives, financial situation, or needs of individual clients. Clients should consider whether any opinions or suggestions in this information are suitable for their particular circumstances.
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