Protein Meal: On Tuesday, CBOT soybeans rose due to a decline in the U.S. soybean crop condition rating. The latest crop report showed the soybean good-to-excellent rate fell to 63%, below the market expectation of 64%. Recent hot and dry weather in the main producing areas has negatively impacted crop growth. Crude oil prices continued to fall, as the market further unwound geopolitical risk premiums. Brazil's crushing industry indicated that it expects the country's 2026 exports to reach a record 115.4 million tons, with crushing volumes also increasing year-on-year.
Domestically, protein meal prices fell with reduced open interest, with the main contract dropping over 2%. As bullish factors such as weather, crude oil, and import costs cooled, protein meal gave back previous premiums. Spot soybean meal continued its inventory-building trend, with terminal transaction volumes remaining sluggish. The market continues to focus on producing area weather and the pace of domestic protein meal inventory accumulation.
Oils and Fats: On Tuesday, BMD palm oil fell for a second consecutive day, tracking weakness in crude oil and soybean oil markets. However, strong demand limited the downside for palm oil prices. High-frequency data shows that Malaysia's palm oil exports for July 1-25 increased by 8.1% to 15.9% month-on-month. Pacific sea surface temperatures continue to rise, leading the market to increase its El Niño severity forecasts. Canadian rapeseed is growing well overall, with temperatures not yet reaching extreme levels.
Domestically, vegetable oil futures continued their downtrend, with rapeseed oil falling more than soybean oil and palm oil. Reduced geopolitical risks in the Middle East led to crude oil giving up its risk premium. Combined with weak domestic oil demand and high inventories, both futures and spot oil prices declined together. A clear turning point for domestic and international oil inventories has yet to emerge. The oil market is expected to fluctuate weakly. The market will continue to monitor the shipping situation in the Strait of Hormuz and oil consumption trends.
Live Hogs: On Tuesday, the main live hog futures contract for September continued to weaken, closing down 1.88% at 10,965 yuan/ton. In the spot market, data from Zhuochuang showed the national average live hog price was 10.26 yuan/kg, down 0.06 yuan/kg day-on-day. The benchmark delivery area of Henan saw an average price of 10.5 yuan/kg, down 0.1 yuan/kg. Prices fell in Shandong and Guangdong, rose in Sichuan, and were flat in Liaoning. Breeding side willingness to sell is strong, leading to ample hog supply, while demand remains weak. This has kept short-term live hog prices weak, with futures and spot prices moving in tandem. Later, as weather cools and demand recovers, combined with improved supply from declining production capacity, pig prices are expected to rebound. However, considering that the breeding sow inventory has not yet fallen below the normal level, the rebound is likely to be modest.
Eggs: On Tuesday, egg futures' near-month contracts continued to rebound. The main September contract closed up 1.2% at 4,134 yuan/500 kg, while the August contract gained 1.03%. In the spot market, data from Zhuochuang showed the national average egg price was 4.62 yuan/jin, up 0.05 yuan/jin. In producing areas, Ningjin's powdered shell eggs were 4.6 yuan/jin, up 0.1 yuan/jin, while Heishan's brown shell eggs were 4.2 yuan/jin, flat. In consuming areas, Puxi's brown shell eggs were 4.8 yuan/jin, and Guangzhou's brown shell eggs were 4.8 yuan/jin, both flat. Downstream purchasing enthusiasm was normal, with most consumer market egg prices stable and a few seeing minor adjustments. Futures rebounded after a period of correction. The market will focus on the impact of demand on spot prices and market sentiment on futures.
Corn: On Tuesday, corn futures fluctuated lower, with deferred contracts performing weakly. Trading activity in northeastern China was poor, as traders were willing to sell but downstream buyers mostly adopted a wait-and-see approach with generally average purchasing interest. The current growth of corn in the northeast, while slightly behind the same period last year, is still within normal parameters. There is no bullish weather news to support the market. Corn prices in North China were broadly stable, with narrow adjustments in some areas, keeping the overall range steady. Following a period of sustained price declines, supply and demand have reached a relative balance. However, trade sector inventory levels remain higher than last year. Additionally, the arrival of spring corn in mid-to-late August will supplement market supply. Overall, the market supply and demand situation remains relatively loose. Corn prices in the consuming regions were largely stable, lacking demand-driven upside. Loosened port prices in the north and low futures trading weighed on spot market confidence. Demand continued to be suppressed by substitute products, with market transactions dominated by small-lot essential needs, leaving room for price negotiation. Overall, the corn market in July-August is influenced by a mix of bullish and bearish factors from substitutes and weather. The El Niño drought weather provides price support for U.S. grain, but has limited impact domestically. Futures prices are expected to show a volatile performance.
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