Divergent Trends in China's Feed Market: Cottonseed Meal Defies the Downward Pressure in Early March 2026

1. The Broader Context: Weakness in Soybean and Rapeseed Meals

• Soybean Meal (SBM): Prices for 43% protein soybean meal in coastal regions have softened, trading around 3,150 CNY/ton. This decline is attributed to several factors:
  • Global Supply Surge: Favorable harvest forecasts in Brazil and increased production estimates from the US have weighed heavily on CBOT soybean futures.
  • High Inventory: Despite strong demand from livestock farmers preparing for spring production, domestic crushing plants have maintained high operating rates, keeping inventory levels comfortable and limiting the ability of suppliers to raise prices.
  • Import Costs: A slight reduction in the cost of imported soybeans has further eroded support for domestic meal prices.
• Rapeseed Meal: Following a similar trajectory, rapeseed meal prices have seen corrections, dropping by approximately 40-60 CNY/ton over the past week. Although Canadian canola futures have shown some strength due to improved trade outlooks, the domestic market is currently more focused on the weak correlation with broader vegetable oil trends and sufficient local supply.

2. Cottonseed Meal: The Outlier Showing Strength

• Price Performance:
  • Shandong Region: As a key consumption hub, Shandong has seen 46% protein cottonseed meal prices climb into the 2,950 – 3,000 CNY/ton range, marking a weekly increase of roughly 50 CNY/ton.
  • Xinjiang Region: Being the primary production base, Xinjiang markets are also firm, with prices hovering between 2,400 and 2,500 CNY/ton, reflecting tight local availability and strong outbound logistics to inland provinces.
• Drivers of the Rally:
  1. Supply Constraints: The post-Chinese New Year period typically sees a slower resumption of operations at cottonseed crushing plants compared to soybean crushers. Many facilities in Xinjiang and Shandong are still ramping up, creating a temporary bottleneck in new supply.
  2. Cost Support: Stable to slightly higher prices for seed cotton and cottonseed at the farm gate are providing a solid floor for meal prices. Processors are unwilling to sell at a loss while raw material costs remain elevated.
  3. Substitution Effect: With the price gap between soybean meal and cottonseed meal narrowing, feed manufacturers—particularly in the ruminant (dairy and beef) and aquaculture sectors—are increasingly incorporating cottonseed meal into their formulations as a cost-effective alternative. This surge in demand is absorbing the available spot cargo quickly.
  4. Logistical Factors: Weather-related disruptions in transport networks in early March have occasionally hindered the flow of goods from Xinjiang to the east, tightening supply in key consumption zones like Shandong and Henan.

3. Corn and Energy Feed Trends

4. Market Outlook and Forecast

• Cottonseed Meal: The upward trend may continue for another week as plants fully resume operations. However, once the supply from Xinjiang flows freely and crushing margins stabilize, the rapid price appreciation is likely to plateau. Traders should watch the spread between CSM and SBM closely; if the premium becomes too high, substitution demand will vanish.
• Soybean & Rapeseed Meal: These markets are likely to remain under pressure or trade sideways. The looming arrival of South American soybeans in the second quarter could introduce further downside risk unless weather issues in Brazil or strong US export data provide a counter-narrative.

Conclusion