Oilseeds and Oils: Short-term Expectations Fade, Soybeans Retreat Prices for oilseeds and oils rose and then fell this week, showing weak market performance. Palm oil declined more than soybeans, and domestic edible oils fell more than protein meals. In terms of market themes, the geopolitical situation in the Middle East remains volatile, keeping international crude oil prices elevated. Developments in the Middle East continue to be a focus. The conclusion of the US visit to China led to a dissipation of short-term expectations, making subsequent US soybean exports more reliant on price competitiveness. US soybean crush volumes were high in April. Although this involved seasonal maintenance, strong profits still drove a year-on-year increase in crush volumes. Market expectations for an upward revision to US biodiesel policy are high, supporting US soybean oil and painting an optimistic outlook for US soybean crushing. Domestically, arrivals of Brazilian soybeans have increased, but slow customs clearance has kept crusher operating rates largely unchanged this week. Operating rates are expected to recover next week, leading to higher crush volumes and a return to inventory accumulation for both soybean meal and soybean oil. Soybean meal and oil offer the best value among protein meals and vegetable oils, though demand prospects for soybean meal appear stronger than for oils. End-user purchasing willingness is diverging, leading to a decline in the oil-to-meal ratio. High-frequency data shows Malaysian palm oil exports for May 1-15 fell by 16% to 1% compared to the previous period, with the decline narrowing from the 1-10 period, indicating improved price competitiveness for palm oil. Malaysia lowered its June palm oil reference price, resulting in a year-on-year decrease in export duties, though the difference from May is minimal, offering limited stimulus for exports. Planting progress for Canadian canola, Russian sunflower seeds, and Ukrainian sunflower seeds is slower than usual. With warmer weather, farmers are rushing to plant in May, but expectations for a bumper oilseed harvest remain unchanged. Palm oil production data is favorable, contributing to inventory accumulation. Both domestic and international spot markets for edible oils face pressure from ample supply and cautious demand. However, long-term bullish expectations are being reinforced, based on multiple agencies raising the probability and intensity of an El Niño event and heightened diesel shortages. The edible oil market shows near-term weakness but long-term strength, awaiting buying opportunities.
Eggs: Spot Prices Provide Support, Futures Show Strength Egg futures prices performed strongly overall this week. Early in the week, prices continued their upward trend, driven by spot prices and market sentiment. Near-month contracts outperformed far-month contracts. As spot prices continued to climb, trade-side stocking became more cautious. On Wednesday, the June 2026 contract retreated from highs, with far-month contracts following suit. Prices resumed their upward movement on Thursday. Due to current exchange position limits, the main egg futures contract completed a rollover this week. Spot egg prices rose first and then fell this week, with the weekly average price higher than the previous week. As of May 15, the daily average price for brown-shell eggs in China, according to Zhuochuang data, was 4.29 yuan per jin, up 0.2 yuan per jin from last week, reaching a weekly high of 4.37 yuan per jin. Early in the week, demand improved due to concentrated post-holiday restocking, coupled with low inventory in production areas, driving a sustained price increase. As prices reached high levels, downstream buyers became cautious about purchasing high-priced supplies, slowing market turnover and leading to a slight price decline. Impacted by persistently high volumes of older layer culling recently, short-term supply has improved. Combined with supportive demand, spot prices have shown sustained strength. As spot prices rebounded, breeding profits continued to increase. Zhuochuang sample data shows that as of May 14, egg breeding profits reached 1.05 yuan per jin, an increase of 0.29 yuan per jin from the previous week, standing at a relatively high level compared to the same period in the past six years, indicating considerable profitability. However, on the other hand, increased profits have reduced the willingness of breeders to cull older layers. Data from May 14 shows culling of 16.31 million older layers, marking the fourth consecutive week of decline. If culling volumes continue to decrease, it may hinder future capacity reduction. Based on historical chick placement data, new supply is expected to increase slightly before August. Unless culling recovers to high levels or increases, supply will continue to pressure egg prices. On the demand side, as southern regions gradually enter the rainy season, spot egg prices are likely to be affected by cautious trader stocking, with a high probability of seasonal correction. In the short term, both egg futures and spot prices are strong. Opportunities for selling on rallies may be considered, while staying alert to potential disruptions from increased culling or strength in related commodity prices.
Corn: May USDA Report Supports Wheat Rally, Domestic Prices Dip Then Recover International Markets: The May USDA report was released, forecasting a significant reduction in US wheat production, leading to a sharp rise in wheat and a follow-on gain in corn. On Tuesday, US wheat hit limit-up, as the USDA projected US wheat production to fall to its lowest level since 1972. Drought, along with rising fuel and fertilizer costs, supports higher planting costs for both wheat and corn. Weather-wise, drought is concentrated in the US Southern Plains, the core region for hard red winter wheat. Field surveys estimate a 25% yield reduction, while the USDA report forecasts a 21.3% year-on-year decline. Benefiting from spillover effects from wheat, corn prices also rose. Data-wise, US corn production is forecast to drop from a record 17.021 billion bushels to 15.995 billion, slightly above analyst expectations of 15.934 billion, indicating significant supply pressure for US corn. Rising oil prices provide support for grain prices, alongside increases in fertilizer and fuel costs. Domestic Market: Corn prices trended weaker this week. As of May 14, the national weekly average corn price was 2387 yuan per ton, a slight decrease of 15 yuan per ton from last week. Prices in Northeast China were weak, negatively impacted by policy-related grain auctions. Traders in production areas showed limited willingness to sell at low prices, resulting in inactive trading. The North China corn market fell first and then rose, with the overall price center shifting slightly lower. Expectations for targeted rice auctions and the impact of new wheat making room in storage led to high trader selling volumes, prompting downstream enterprises to generally lower purchase prices. As deliveries to enterprises decreased, corn purchase prices stopped falling and rebounded. Prices in consumption areas saw a slight decline. Limited shipments from production area traders, combined with news about broken rice auctions and weaker futures, fostered a wait-and-see attitude among traders in consumption areas. Feed demand remains sluggish, leading to generally cautious purchasing by enterprises. Technically, the main July 2026 corn contract found support near the 2350 yuan integer level this week, with prices oscillating higher. Resistance for the July contract rebound is around 2400 yuan. Given increased substitute supply and weak downstream purchasing power, corn futures prices are expected to continue their medium-term downward trend.
Hogs: Spot Hog Prices Stable with Slight Decline, July Contract Premium Narrows Domestic hog prices followed a pattern of falling first and then rising this week. As of May 15, the national average hog price was 9.52 yuan per kilogram, down 0.14 yuan per kilogram from last week. The benchmark delivery location, Henan, saw a price of 9.78 yuan per kilogram, down 0.2 yuan per kilogram from last week. Early in the week, breeding entities increased their willingness to sell, leading to ample market supply. However, with rising temperatures, downstream acceptance was moderate, creating a supply-demand imbalance and pushing prices lower. Later in the week, after prices fell to low levels, secondary fattening activity re-emerged in some regions, providing a floor for hog prices and leading to a rebound. Data shows that as of May 14, the average price for piglets was 240 yuan per head, up 11 yuan per head from last week. On the supply side, sow farms have normal external sales plans, ensuring stable piglet supply. On the demand side, after hog prices recently bottomed, downstream restocking sentiment improved, especially among small-scale farmers, supporting the rise in piglet prices. The Ministry of Agriculture and Rural Affairs issued the "Comprehensive Hog Production Capacity Regulation Implementation Plan (2026 Revision)." This plan, considering factors like pork market supply-demand and improvements in production efficiency, sets the national target for the normal inventory of breeding sows at around 37.5 million head, marking another downward revision from the target set in February 2024. In April 2026, sample data showed culling of 204,280 breeding sows, a month-on-month increase of 0.43%; sales of replacement gilts were 8,080 head, a month-on-month decrease of 35%. While culling increased slightly, the larger decline in sales indicates continued capacity reduction. Average transaction weights by province mainly declined this week, with decreases in Northeast China, Southwest China, and Anhui. Larger declines in Northeast and Anhui markets led to a slight drop in the national average transaction weight. As of May 14, the average slaughter weight was 125.32 kilograms per head, down 0.1 kilograms per head from last week. Demand for heavy hogs has softened. Current weights remain high. In mid-month, some large-scale farms that previously held back hogs may accelerate sales, shortening the holding cycle. Data shows the hog-to-corn ratio was 4.15 as of May 6. As of May 14, profits for farrow-to-finish operations were -303 yuan per head, with losses widening by 15 yuan per head from last week. Profits for piglet fattening were -195 yuan per head, with losses widening by 37 yuan per head. Recently, breeding costs have been relatively stable, while profits have followed spot prices down, corresponding to an expansion in breeding losses. Slaughterhouse operating rates rose first and then fell this week, but were overall higher than the same period last week. As of May 15, sample slaughterhouse operating rates were 37.28%, up 0.06 percentage points from last week. Increased post-holiday hog sales made procurement smoother for slaughterhouses, driving a slow increase in operating rates. However, due to rising temperatures, terminal pork demand weakened, leading to limited fresh product orders for slaughterhouses and causing a slight decline in operating rates later in the week. Overall, spot hog market prices remain stable, with Henan spot prices holding around the 10 yuan per kilogram level. The July futures contract price has corrected, while the September contract awaits buying opportunities after the adjustment concludes. Short-term long positions may be considered cautiously.
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