Protein Meals:
On Monday, CBOT soybeans rose due to forecasts for adverse crop weather in the U.S. Midwest and a surge in crude oil prices. Soybean oil futures gained while soybean meal futures fell, with active spread trading favoring oil over meal. U.S. soybean export inspections aligned with market expectations. The post-market crop progress report indicated a soybean good-to-excellent rating of 65%, up from the previous week's 64% and exceeding the market expectation of 64%. Domestically, a broad decline in commodity prices was observed, with protein meal futures continuing their sideways movement and price volatility narrowing. Spot market activity was light, with participants adopting a wait-and-see approach. Data from MySteel showed that soybean inventories and soymeal stocks increased last week, while unfilled contracts declined. In the absence of a core directional catalyst, commodities are likely to continue their range-bound trading pattern.
Oils and Fats:
On Monday, BMD palm oil futures advanced, tracking strength in related markets. Canola and U.S. soybean oil futures also rose, supported by a surge in crude oil prices following an escalation of conflict in the Middle East. Both the Canadian prairies and U.S. soybean growing regions are experiencing high temperatures, raising weather-related concerns. U.S. actions to block the Strait of Hormuz have sparked market worries over the waterway's transport capacity. Domestically, amidst a general decline in commodities, the oils and fats sector traded weakly, with palm oil showing the most pronounced weakness. However, as overnight international markets strengthened, the cost of importing oils and fats into China increased, which is expected to lend renewed support to domestic futures and spot prices. The market will continue to monitor the shipping situation in the Strait of Hormuz and domestic consumption trends for oils and fats.
Live Hogs:
On Monday, the main live hog futures contract (2609) weakened during the session, closing down 3.49% for the day at 12,015 yuan per tonne. In the spot market, data from SCI99 showed the national average daily price for hogs at 11.2 yuan per kilogram yesterday, down 0.1 yuan from the previous day. The average price in the benchmark delivery region of Henan was 11.3 yuan/kg, down 0.48 yuan/kg. Prices were flat in Guangdong, rose in Sichuan, and fell in Liaoning and Shandong. Increased supply from the farming side, coupled with insufficient demand from end-users, led to the price decline. From a fundamental perspective, the relatively loose supply situation for live hogs has not yet changed. Furthermore, demand remains weak due to high temperatures, suggesting hog prices may continue their weak trend.
Eggs:
On Monday, the main egg futures contract (2608) weakened after a volatile session, closing down 2.01% at 4,684 yuan per 500 kilograms. The 2609 contract closed down 2.35% at 4,529 yuan per 500 kilograms. Spot market data from SCI99 showed the national average egg price at 4.61 yuan per jin yesterday, up 0.02 yuan. In producing areas, pink-shell egg prices in Ningjin were 4.5 yuan/jin, while brown-shell egg prices in Heishan were 4.2 yuan/jin, both unchanged. In consumption areas, brown-shell egg prices in Puxi were stable at 4.8 yuan/jin, while prices in Guangzhou rose 0.05 yuan to 5.05 yuan/jin. End-user consumption varied, with most traders purchasing based on immediate needs. Prices in some consumption markets rose while others held steady. Supply-side factors continue to support egg prices. Looking ahead, as southern China exits the rainy season and gradually enters the peak annual demand period, expectations for egg prices remain cautiously optimistic. However, with futures prices having risen to elevated levels, caution is warranted against a pullback risk. Market focus remains on the impact of older hen culling and cold storage egg supplies on spot prices, as well as overall market sentiment on futures trading.
Corn:
On Monday, corn futures prices adjusted lower with reduced positions, influenced by declines in related commodities. During the session, the main corn futures contract (2609) was capped by resistance at the 40-day moving average and retreated, closing the day with a small bearish candlestick. In the spot market, prices in Northeast China remain generally soft. Traders in producing regions are willing to sell, with the 2,320 yuan/tonne purchase price at northern ports gradually being accepted. Grain movement in the Northeast remains slow, with deep processing purchases largely stagnant and procurement by southern enterprises also limited. Weak demand provides insufficient momentum for a near-term price surge. Corn prices in North China are stable to slightly weaker. Trader inventories are higher year-on-year, and as trading progresses, their willingness to sell is increasing. Downstream enterprises lack strong purchasing intent, mainly buying as needed. In the short term, with a relatively loose supply-demand environment, corn prices are generally stable with a weak bias. Quotations in consumption areas are mostly stable with minor upward adjustments in some ranges, supported by a relatively firm futures market which has bolstered some traders' pricing sentiment. However, downstream demand continues to be weak, with feed mills primarily consuming existing inventories and showing no intention for large-scale stockpiling. Overall trading volume remains low. In summary, the corn market in July is in a stalemate between bullish and bearish forces, awaiting new directional cues from weather developments. International grain costs are rising due to weather concerns, while the domestic market continues to monitor weather progress. Additionally, market participants will watch for changes in the pace of trader sales and the rhythm of potential policy stock releases.
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