This week, the oilseeds and oils market exhibited a pronounced divergence in performance. On the international front, BMD palm oil showed relative strength, with trading logic centered on marginal improvements in supply and demand in the producing regions. In contrast, CBOT soybeans were pressured by weak crude oil prices and demand concerns, briefly touching a phase low. While they later found support and stabilized due to large export sales orders, the rebound lacked momentum. Domestically, oils and meals maintained an overall consolidation pattern, with clear performance divergence among varieties: rapeseed oil trended weaker, while palm oil remained relatively resilient.
At the macro level, as the market gradually priced in the potential "restoration of traffic in the Strait of Hormuz," crude oil relinquished its geopolitical risk premium, with prices falling to a near four-month low. Consequently, the commercial profitability of producing biodiesel from vegetable oils has turned negative, making biodiesel consumption heavily reliant on policy support. Furthermore, the Federal Reserve's meeting minutes hinted at potential two-way volatility in the future monetary policy path, increasing overall volatility in financial markets. From a fundamental perspective, South American bumper harvests continue to cap upside potential: Argentina's soybean harvest has materialized as expected, with production estimates remaining around 51.5 million metric tons; Brazil's June exports are projected to reach a high of 15.31 million metric tons, an increase of over 1.5 million tons year-on-year. In contrast, favorable weather in U.S. soybean growing regions supports strong yield expectations, with the market awaiting the end-of-month planting area report, where mainstream expectations lean towards an upward revision of planting intentions. Although new-crop demand expectations have improved somewhat—confirmed by two large cumulative sales of approximately 500,000 metric tons (mostly new crop) reported by the USDA on Wednesday and Friday, partially digesting supply pressure and keeping U.S. soybeans in a consolidation range—the domestic protein meal market remains constrained by the reality of inventory accumulation. Downstream livestock farming losses are dampening procurement enthusiasm, leading to weak spot prices. However, given that futures and spot prices are already near expected bottoms, downside space is limited, resulting in a stagnant, stabilizing trend.
In the oils sector, both internationally and domestically, end-user procurement has turned cautious. The demand side is struggling to absorb supply pressure, leading to a gradual accumulation of inventories. While meteorological agencies have confirmed the formation of an El Niño event, raising expectations for future production cuts due to high temperatures and drought, short-term realities remain burdensome. In the producing regions, Malaysian palm oil production saw a significant month-on-month increase in early June, while export growth was limited, indicating that inventory digestion will still require time; Indonesian officials reiterated that the B50 policy will be implemented on July 1st, with the market closely monitoring the detailed implementation rules. Domestically, the market is in a seasonal consumption lull for oils, with basis differentials continuing to weaken. Coupled with substantial impending arrival pressure, deteriorating crush margins for futures contracts have slowed forward procurement. The overall market is characterized by significant divergence under a scenario of "weak reality, strong expectations."
Eggs: Spot Prices Weigh on Futures, Main Contract Retreats from Highs
1. This week, spot egg prices continued their correction. However, buoyed by market sentiment, egg futures initially maintained a high-level consolidation. As spot prices continued to decline, they began to weigh on futures prices. On Thursday, futures prices experienced a significant pullback, with the main 2608 contract falling 3.51% on the day. On a weekly basis, the main 2608 contract accumulated a loss of 3.75%, closing at 4514 yuan per 500 kilograms.
2. After egg prices rose to high levels, the elevated cost began to suppress terminal demand and traders' willingness to stockpile. Furthermore, as the Dragon Boat Festival approaches, the waning of pre-holiday stocking enthusiasm has turned negative for spot prices. As of June 18th, Zhuochuang data showed the average daily price for brown-shell eggs in China at 4.73 yuan per jin, down 0.39 yuan per jin from the previous week. As southern regions successively enter the rainy season, demand is negatively impacting egg prices, creating a need for a spot price correction.
3. Data from Zhuochuang sample points indicates that in May, China's layer inventory stood at 1.279 billion birds, down 1.23% month-on-month and 4.12% year-on-year; inventory remains at a relatively low level compared to the same period in previous years, providing support from the supply side. However, from a demand perspective, support from pre-festival stocking for the Dragon Boat Festival is diminishing as the holiday nears. Additionally, following seasonal patterns, the onset of the rainy season in southern regions is unfavorable for egg storage, introducing a seasonal negative factor that contributes to the need for a spot price correction. Spot prices may continue to weigh on futures, and egg prices have the potential for further declines. On the other hand, it is important to note that if egg prices continue to fall later, leading to reduced farming profits, this could increase the willingness of farmers to cull flocks. This would once again highlight the supportive supply-side factors for egg prices. In the short term, focus remains on market sentiment and spot prices. In the medium to long term, attention should be paid to changes in farmers' restocking and culling mentalities and their impact on supply.
Corn: U.S. Wheat and Corn Rebound, Domestic Market Sees Minor Fluctuations
International markets: This week, U.S. wheat futures consolidated and closed higher, supported by new global export business and hot weather in Europe. Winter wheat harvesting progressed faster than analysts expected. Winter wheat ratings improved over the past week but remain near historically low levels. Spring wheat crop ratings improved, with the good-to-excellent rating at 55%, at the high end of analyst estimates. U.S. corn futures fell first then rose, closing higher for the week. Early in the week, favorable U.S. weather and declining crude oil prices pushed corn futures to a five-month contract low. Traders are closely monitoring weather conditions in France, where adverse weather is damaging crops. Currently, the U.S. corn good-to-excellent rating is 68%, with planted area estimated at 96 million acres, above the March prediction of 95.20 million and the USDA's estimate of 95.30 million.
Domestic market: Corn prices trended weaker this week. As of June 11th, the national weekly average corn price was 2,362 yuan per metric ton, down 6 yuan per ton from the previous week. By region, the Northeast market saw narrow, weak adjustments this week, with demand remaining sluggish. Feed enterprises in the Northeast primarily utilized over-aged rice and rice bran mixtures. In North China, corn prices fell first then rose. Early in the week, traders maintained a strong willingness to sell before the wheat harvest. As harvesting commenced in Shandong and Hebei, corn trading by traders weakened, leading to a rebound in corn prices. In consumption areas, sporadic rigid demand restocking led to minor local price increases. Downstream feed enterprises made sporadic purchases, mainly procuring with price pressure, making it difficult to achieve significant transaction volumes. Technically, the main corn 2609 contract saw mixed movements, with short-term prices hovering near the lower bound of the consolidation range. New wheat arrivals and substitute supply continue to pressure corn futures.
Hogs: Weak Spot Prices, Hog Futures Slide Sharply Towards Previous Lows
1. Domestic hog prices this week followed a pattern of falling, then rising, then falling again. As of June 18th, the national average hog price was 9.56 yuan per kilogram, down 0.12 yuan per kilogram from the previous Friday; the benchmark delivery area price in Henan was 9.78 yuan per kilogram, unchanged from the previous Friday. In the early part of the week, demand remained relatively weak, with downstream procurement enthusiasm low, leading to weaker prices. Mid-week, as the Dragon Boat Festival approached, downstream stocking enthusiasm increased, procurement volumes rose, and farmers capitalized by holding out for better prices, driving hog prices higher. Later in the week, as pre-festival stocking concluded, downstream purchasing enthusiasm waned. Northern markets led the price decline, causing the national hog price to halt its rise and retreat.
2. Zhuochuang data shows that on June 12th, the sales price for replacement gilts was 1,420 yuan per head, unchanged from the previous month. As of June 18th, the average price for piglets was 214 yuan per head, down 32 yuan per head from the previous week. On the supply side, breeding farms' external sales plans are normal, and piglet supply is ample. On the demand side, sustained farming losses have weakened profit expectations for fattening operations, significantly reducing their enthusiasm for restocking piglets. The piglet market is oversupplied, leading to the price decline.
3. The national average live hog transaction weight continued to decline this week. As of June 18th, Zhuochuang sample data showed the average slaughter weight at 124.36 kilograms per head, down 0.13 kilograms per head from the previous week. On one hand, rising temperatures have slowed daily weight gain, and low, consolidating hog prices lack upward momentum, prompting farmers to sell at market prices. On the other hand, the Dragon Boat Festival provided some boost to downstream markets, accelerating hog consumption and continuing the weight decline. Only in Northeast China did weights see a slight rebound as small-scale farmers sold larger hogs they had previously held back for the festival. In regions like Jiangxi and Hunan, increased demand for heavier hogs widened the price spread between fat and standard hogs, leading to increased sales of some larger hogs and a slight increase in average weight.
4. Customs data shows that in May 2026, pork imports totaled 70,000 metric tons, unchanged from the previous month.
5. Wind data shows that on June 10th, the government website reported a hog-to-grain price ratio of 4.01.
6. Zhuochuang data indicates that on June 18th, the profit for farrow-to-finish operations was -311 yuan per head, with losses narrowing by 12 yuan per head from the previous week. The profit for piglet fattening was -215 yuan per head, narrowing by 11 yuan per head from the previous week. Influenced by the Dragon Boat Festival, downstream demand saw a slight increase during the week, while farmers' willingness to sell was not strong, leading to a slight week-on-week increase in the average price. Meanwhile, feed costs for the corresponding farming cycle decreased slightly, but the cost of purchasing piglets increased somewhat, resulting in little overall change in comprehensive costs week-on-week. Slightly increased sales revenue combined with largely stable costs led to a slight improvement in both profit metrics (i.e., narrowing losses), though operations remain in a loss-making phase.
7. Zhuochuang statistics show that as of June 18th, the operating rate for sample slaughter enterprises was 38.69%, up 1.85 percentage points from the previous week. Approaching the Dragon Boat Festival holiday, downstream stocking demand increased slightly, slaughterhouse orders rose, and with hog supply still relatively ample, slaughterhouse operating rates subsequently increased.
8. This week, the main hog 2609 contract recorded three consecutive negative sessions, with the price range shifting downwards towards the previous low range. Currently, nearby-month hog contracts are weighed down by weak spot price quotes, pressuring prices downward. The deferred hog 2609 and 2611 contracts, trading at a premium to spot prices, lack momentum for bulls to push them higher, resulting in a pattern of rising first then falling. Technically, short-term focus is on the technical support at the previous low for the September contract, with a weak outlook maintained.
Comments