Market Overview
Corn
Corn futures have been trading sideways since the start of March as the market continues to fluctuate at a high level but lack the momentum to break above 3,000 yuan/ton ($470/ton). September corn futures closed at 2,919 yuan/ton ($456/ton) on Tuesday.
Concerns about Covid-related planting disruptions and rising input costs are helping to keep the market supported.
However, hog feed margins remain deeply negative which limited corn demand, and large auctions of government rice reserves could provide an alternative feed source if corn prices are too high.
The next major catalyst for the market will be the spring planting progress. While the central government has stressed that Covid-related controls should not disrupt farming, the implementation of Covid measures is ultimately handled on a very local level. The market will be closely watching the situation in northeast China in coming weeks.
Hog
Hog futures continued to fall to a new record low this week even as the fourth round of government reserve pork purchases was announced recently.
Earlier this year, there was a common sentiment that prices would rebound in the second half of 2022.
However, the sentiment is shifting as more brokers and analysts are now floating the idea that prices will remain depressed through the entirety of 2022.
Large firms continue to spin off non-core businesses and raise capital to weather this downturn. Most recently, Tang Renshen announced plans for a non-public share issuance of up to 1.2 billion yuan ($188 million) to fund development of a new hog breeding operation.
Soymeal
Soymeal futures in China nudged lower on Tuesday after rising in the past two trading sessions. The main contract on Dalian for September 2022 delivery was marked at 3,922 yuan/ton ($615/ton) by market close, the weakest point in a month.
Market sentiment for spot demand has remained poor in recent weeks as Covid cases spiked in China triggering lockdowns that limited transportations and economic activities.
Vegoils
Futures for edible oils in China jumped today as reports of lower palm oil stocks in Malaysia boosted market sentiment.
The main palm oil futures on Dalian rose nearly 2.6% to 10,638 yuan/ton ($1,667/ton) by market close, followed by soyoil futures for which the main contract gained 1.8% on the day to 10,708 yuan/ton ($1,678/ton).
Rapeseed oil futures on Zhengzhou Commodity Exchange also firmed despite the announcement of more state reserve auctions this week. The main contract jumped more than 2% to 12,878 yuan/ton ($2,018/ton).
US soybean exports to China hit 6-wk high, sorghum volume plunges
Weekly soybean exports from the US to China have risen for its fourth consecutive weeks to reach the highest level since late February this year, latest data from USDA showed.
The US shipped a total of nearly 424,500 tons of soybeans to China during the week of April 1-7, up 22% week on week, accounting for 55% of US shipments globally that week.
US corn exports to China also gained marginally on the week to 471,550 tons, up 3%, representing a third of overall US corn exports last week.
The volume to China was the largest in three weeks.
In contrast, sorghum shipments for China plunged 41% week on week to less than 140,000 tons last week, marking the lowest level in nine weeks.
However, it still accounted for nearly all of US sorghum exports last week.