CITIC Construction Investment Futures: Agricultural Products Morning Report on April 7

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Corn: Neutral

1. Market Focus: The pig-to-corn ratio crossing the first-level warning line continues to decline, and pig prices have reached the lowest level in the past 7 years; the replenishment phase has been temporarily completed, processing demand has returned to the high level seen in February, and mainstream purchase prices at Jinzhou Port have fallen back to 2325-2330 yuan/ton; remaining grain is basically sold out, with attention on tight supply and the fermentation of feed/ethanol-related topics.

2. Brief overview of foreign markets: COFCO International is planning to ship a vessel of 36k tons of Argentine corn to domestic ports, marking Argentina’s first corn export to China in 15 years;

3. Summary of views: Downstream and channel inventories have reached a phased balance, with sideways trading expected during the week. Support is at 2330 yuan/ton, resistance at 2380 yuan/ton. Focus on the weather evolution during the planting season from April to June and the actual impact of cost transmission. Strategy should be to operate within a range, avoiding chasing highs.

Soybean Meal: Neutral

1. Geopolitical uncertainties remain significant, with CBOT soybean futures fluctuating narrowly in the short term. As of March 31, managed funds held about 213k net long soybean contracts, reflecting that the initial planting area in the U.S. is slightly below expectations and the crush expansion outlook, combined with the influence of overseas market bets on CBOT soybeans moving higher;

2. The market continues to correct after previous trading around delayed port arrival topics, with continuous retracement of previous gains in soybean meal futures. Meanwhile, CBOT soybeans have returned to the volatility range before the escalation of geopolitical conflicts, coupled with selling pressure from South American harvest progress, weakening the marginal support from costs for soybean meal.

Summary of views: Funds are shifting to the September contract. In the short term, supply expectations for long-dated soybeans are likely to influence prices, with support expected in the 2900-2950 yuan/ton range.

Eggs: Neutral

Spot prices in main producing areas fluctuate. Hebei Guantao’s spot quote is 3.07 yuan/jin, unchanged from the previous day. Breeding profits have shifted from loss to slight profit, about +0.1-0.2 yuan/jin. The overall supply remains ample. Although the culling of hens in late March increased significantly compared to the previous period, temporarily tightening supply, the breeding side is limited by small losses and strong culling reluctance, resulting in slow culling progress and a relatively young age structure, with a low proportion of old hens to be culled, and capacity reduction not meeting expectations. Meanwhile, imported breeding chickens have resumed, and laying rates have risen to high levels, further increasing supply pressure.

Summary of views: Short-term bullish traders are watching for exit opportunities after profit realization.

Pork: Neutral

Live pig prices are weakening. Yesterday, the average spot price in main producing areas was 9.01 yuan/kg, down 0.05 yuan/kg from the previous day. According to Steel Union statistics, planned slaughter volume in April is expected to increase by 4.24% compared to March. During the holiday, northern markets shifted to adjustment phase, with slowed slaughter pace, supported by market sentiment and some secondary breeding channels diverting, leading to price rebounds in some regions. Post-holiday, attention will be on the recovery of slaughter volume and the continuity of secondary breeding pace. During the Qingming holiday, southern markets mostly maintained stable or narrow adjustments, with market feedback indicating a short-term boost due to the holiday.

Summary of views: No signs of improvement in the near term; focus on capacity reduction in the longer term, continuing to consider buying on dips.

Risk Reminder: This information is produced by the research and development team of the futures company. All information is sourced from publicly available data. CITIC Construction Investment Futures strives for accuracy and reliability but does not guarantee the correctness or completeness of this information. Trading based on this is at your own risk. This report does not constitute personal trading advice and does not consider individual client’s specific trading goals, financial situation, or needs. Clients should consider whether any opinions or suggestions in this information are suitable for their particular circumstances. (Wei Xin, Futures Trading Consulting Practitioner ID: Z0014814; Liu Hao/Futures Trading Consulting Practitioner ID: Z0021277; Deng Haoran/Futures Trading Consulting Practitioner ID: Z0023357)

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Editor: Li Tiemin