Group 1 - Canada imposed a 100% tariff on Chinese electric vehicles and a 25% tariff on steel and aluminum products, aligning with the US's Indo-Pacific strategy, but underestimated China's retaliatory measures [3] - China initiated an anti-dumping investigation against Canadian canola seeds, leading to a 75.8% deposit requirement on all Canadian canola companies, effectively closing the Chinese market to Canadian canola [3][5] - The impact on Canadian farmers is severe, with over 90% of canola previously exported to China now stuck in warehouses, affecting the livelihoods of thousands [5][7] Group 2 - Canada sought assistance from the US but faced continued tariffs on its products, including potential 250% tariffs on lumber and dairy, exacerbating its economic challenges [7] - Canadian Prime Minister expressed willingness to mend relations with China, indicating a shift in diplomatic strategy, but actual policy changes regarding tariffs have not yet occurred [7][9] - China has diversified its canola imports, purchasing from Australia and other countries, indicating that Canada may lose its market share permanently if relations do not improve [9]

Core Points - The deterioration of China-Canada relations is primarily due to Canada's alignment with the U.S. "containment" strategy against China, leading to significant economic repercussions for Canada [5][19] - Canada is now seeking high-level dialogue with China after experiencing severe domestic economic challenges, including rising unemployment and agricultural product surpluses [3][23] Group 1: Economic Impact on Canada - Canada has faced punitive tariffs of up to 100% on various core products, including canola seeds, due to its trade policies against China [3][12] - The Canadian government has seen a dramatic increase in unemployment rates and a surplus of unsold agricultural products, prompting urgent discussions among its leadership [3][21] - The reliance on China for canola seed exports is highlighted, with 90% of Canada's canola seed exports going to China, making the situation critical for Canadian farmers [17] Group 2: Diplomatic Shifts - The Canadian government, under Prime Minister Carney, has shifted from a hardline stance to seeking dialogue with China, indicating a recognition of the need for cooperation [25] - Following the United Nations General Assembly, Canadian officials have expressed a desire to meet with Chinese leaders, marking a significant change in diplomatic posture [3][25] - The Canadian government is under pressure to resolve the trade issues, as its previous strategies have led to a political crisis and declining public support for the administration [23][21] Group 3: Trade Policies and Tariffs - The Carney administration has implemented additional tariffs on Chinese products, including a 100% tariff on electric vehicles and 25% on steel, exacerbating trade tensions [7][10] - A punitive "double lock" mechanism has been established, imposing further tariffs if Canadian steel exports exceed previous levels, effectively stifling potential growth in this sector [10] - China's response to Canada's tariffs has included significant retaliatory measures, including high tariffs on Canadian agricultural products, which have severely impacted Canada's agricultural sector [12][14]

Core Viewpoint - The Canadian government announced a CAD 370 million subsidy for the canola industry, but this measure has not alleviated domestic dissatisfaction due to the significant impact of tariffs and China's anti-dumping measures on Canadian canola exports [1][3]. Group 1: Industry Dependency and Trade Relations - The Canadian canola industry heavily relies on the Chinese market, with nearly 50% of its total exports going to China [1]. - China's imposition of a 75.8% deposit policy on Canadian canola has severely disrupted exports, leading to substantial losses for farmers and exporters [1][3]. - The Canadian government faces a trade crisis stemming from its own policies, necessitating a reevaluation of its tariff strategy on Chinese electric vehicles [1][3]. Group 2: Government Response and Industry Sentiment - The government's response, including the CAD 370 million subsidy, is viewed as inadequate by industry leaders, who emphasize the need for restored normal trade relations rather than financial aid [3][5]. - Farmers in Saskatchewan express concerns that without resolving trade disputes with China, they will face significant economic losses [3][5]. - The Canadian government is beginning to reconsider its approach, indicating a shift towards more pragmatic policies in light of domestic pressures and China's retaliatory measures [5][7]. Group 3: Strategic Reevaluation - The Canadian government recognizes the severity of the situation, understanding that subsidies alone cannot resolve the industry's challenges; restoring trade with China is paramount [5][8]. - There is a growing acknowledgment that Canada must reassess its trade policies with China, as losing this market would have profound economic implications [5][8]. - The current situation tests Canada's diplomatic acumen and strategic resolve, as it must balance ally policies with the need for pragmatic engagement with China [8].

Report Overview - Report Title: "Supply Disturbance, Stable Demand, Limited Downside - 2025 Semi - annual Outlook for Soybean Meal Futures" [2][3] - Report Date: June 23, 2025 [1] - Analyst: Wu Guangjing [4] 1. Report Industry Investment Rating No industry investment rating is provided in the report. 2. Report's Core View - The price of soybean meal futures has limited downside space. The supply side has disturbance factors, including tightened global soybean supply - demand in the 2025/26 season, a tight balance sheet for US soybeans, and uncertain actual supply of soybean meal. The demand side is expected to increase steadily [4]. 3. Summary by Relevant Catalogs 3.1 2025 H1 DCE Soybean Meal Futures Price Review - **First Stage (Jan 10 - Apr 8)**: Prices rose due to a bullish USDA report in January, Sino - US and Sino - Canadian trade frictions [7]. - **Second Stage (Apr 9 - May 20)**: Prices fell as the market pre - traded the easing of Sino - US trade friction and the spot supply pressure from the concentrated arrival of soybeans in Q2 [8]. - **Third Stage (May 21 - Jun 6)**: Prices rose with the easing of Sino - US trade friction, improved market sentiment, rising US soybean prices, and increased import costs [8]. 3.2 2025 H2 Main Influencing Factors for Soybean Meal Futures Prices 3.2.1 New - crop Soybean Supply - Demand Tightening: Declining Global Soybean Inventory - to - Consumption Ratio in 2025/26 - **Global Soybeans**: In the 2025/26 season, the supply increase is lower than the demand increase. The total supply is expected to be 7.3682 billion tons (up about 3.15% year - on - year), and the total demand is 6.1248 billion tons (up about 3.6% year - on - year). The inventory - to - consumption ratio is about 20.3%, down year - on - year and at a three - year low [12]. - **US Soybeans**: The 2025/26 balance sheet is tight. Production is expected to be 1.1812 billion tons (down about 0.6% year - on - year), and the total supply is 1.2819 billion tons (down about 0.5% year - on - year). Total demand is 1.2015 billion tons (up 840,000 tons year - on - year), and the inventory - to - consumption ratio is about 6.68%, at a three - year low. The low price in 2024 led to reduced production in 2025, and there is room for further production decline due to imperfect weather and potential yield cuts [14][15]. - **South American Soybeans**: In the 2025/26 season, Brazil's production is expected to increase slightly (up 6 million tons to 175 million tons, about 3.55% year - on - year), and Argentina's production is expected to decrease slightly (down 500,000 tons to 48.5 million tons, about 1% year - on - year). The marginal negative impact of South American supply pressure is decreasing [41]. 3.2.2 Soybean Meal Supply: Loose in Mid - year, Decreasing in Q4 - The actual supply of soybean meal is uncertain. Based on seasonal characteristics, it is estimated to be loose in mid - year and decrease in Q4. From the perspective of soybean import expectations, supply is expected to be loose from June to July. From the seasonal perspective of soybean imports, imports will decline from September to October and increase from November to December. There is uncertainty in Q4 imports due to Sino - US trade friction, and the state can release reserves to supplement supply if needed [53]. 3.2.3 Soybean Meal Demand: Steady Growth due to the Recovery of Pig Farming - In H2 2025, soybean meal demand is expected to grow steadily. Pig inventory is expected to increase in Q2 - Q3 2025, and feed production is also expected to increase year - on - year. The decline in the proportion of soybean meal in feed is limited because of the low forward prices of soybean meal futures [56]. 3.3 Conclusion and Investment Outlook - The price of soybean meal futures in H2 2025 has limited downside. It is recommended to go long on DCE soybean meal futures on dips, and pay attention to weather conditions, important USDA reports, and trade agreements [60][61].

Report Summary 1) Report Industry Investment Rating No industry investment rating is provided in the report. 2) Core Viewpoints of the Report - Next week (06.09 - 06.13), the price center of Dalian soybean meal futures is expected to move up, while the soybean No. 1 futures price is expected to fluctuate weakly. For soybean meal, continue to focus on the weather in the U.S. soybean - producing areas (goodness - of - growth rate, weather forecast) and Sino - U.S. trade consultations. The Sino - Canadian trade friction and consultations also affect the fluctuation of rapeseed meal, which indirectly impacts soybean meal. For domestic soybeans, the upper pressure is still the potential state - reserve soybean auction, while the small amount of market surplus grain and the stable - to - strong spot price support the downside space [7]. 3) Summary by Related Catalogs International Soybean Market Fundamentals - **U.S. Soybean Sales and Shipment**: In the week of May 29, 2025, the weekly net sales of U.S. soybeans increased month - on - month but were at the lower end of expectations. The 2024/25 U.S. soybean export shipment was about 310,000 tons, a week - on - week increase of about 47%, and the cumulative export shipment was about 44.67 million tons, a year - on - year increase of about 12%. The weekly net sales of U.S. soybeans to China in the 2024/25 crop year was - 0.1 million tons [2]. - **U.S. Soybean Planting Progress and Goodness - of - Growth Rate**: As of the week of June 2, 2025, the U.S. soybean planting progress was 84%, compared with 78% in the same period last year and a five - year average of 80%. The initial goodness - of - growth rate was 67%, lower than the market expectation of 68% and significantly lower than last year's 72%. However, the market focused more on the bearish impact of the faster planting progress and normal weather [2]. - **Brazilian Soybean CNF Premium, Import Cost, and Crushing Profit**: As of the week of June 6, 2025, the average CNF premium of Brazilian soybeans for July - September delivery increased week - on - week, the average import cost increased slightly week - on - week, and the average crushing profit decreased week - on - week [2]. - **U.S. Soybean - Producing Area Weather Forecast**: According to the June 7, 2025, weather forecast, in the next two weeks (June 7 - June 21), the precipitation in the U.S. soybean - producing areas will be basically normal, and the temperature will be "low first and then high", with a neutral impact [2]. Domestic Soybean Meal Spot Market - **Trading Volume**: The trading volume of soybean meal increased week - on - week. As of the week of June 6, 2025, the average daily trading volume of mainstream oil mills in China was about 120,000 tons, compared with about 80,000 tons in the previous week [5]. - **Pick - up Volume**: The pick - up volume of soybean meal increased week - on - week. As of the week of June 6, 2025, the average daily pick - up volume of major oil mills was about 200,000 tons, compared with about 186,000 tons in the previous week [5]. - **Basis**: The basis of soybean meal (Zhangjiagang) decreased week - on - week. As of the week of June 6, 2025, the weekly average basis was about - 61 yuan/ton, compared with about - 25 yuan/ton in the previous week [5]. - **Inventory**: The inventory of soybean meal increased week - on - week and decreased year - on - year. As of the week of May 30, 2025, the inventory of mainstream oil mills in China was about 260,000 tons, a week - on - week increase of about 50% and a year - on - year decrease of about 66% [5]. - **Soybean Crushing Volume**: The weekly soybean crushing volume decreased slightly week - on - week and is expected to increase next week. As of the week of June 6, 2025, the domestic weekly soybean crushing volume was about 2.24 million tons, and the operating rate was about 63%. Next week (June 7 - June 13), the oil mills' soybean crushing volume is expected to be about 2.29 million tons, with an operating rate of 64% [5]. Domestic Soybean No. 1 Spot Market - **Soybean Price**: The soybean price was stable to strong. In some northeastern regions, the net - grain purchase price of soybeans increased by 20 yuan/ton to 4200 - 4300 yuan/ton; in some inland regions, the price remained flat at 5140 - 5280 yuan/ton; in the sales areas, the selling price of northeastern edible soybeans increased by 0 - 40 yuan/ton to 4620 - 4840 yuan/ton [6]. - **New - Season Soybean Growth in Northeast China**: In some northeastern producing areas, the new - season soybeans are growing well. As of Friday, the new - season soybeans in Heihe, Bei'an, Qiqihar, and Arongqi areas are growing well, and the soil moisture is normal due to recent rainfall [6]. - **Sales Area Situation**: The soybean price in the sales areas continued to make up for the increase, but the demand remained weak. The downstream market accepted the price increase generally and purchased as needed. The demand for terminal edible soybeans was weak, and the sales of domestic soybeans were slow, but the rigid demand still existed [6]. Futures Price Performance - **U.S. Futures**: In the week of June 6, 2025, the main U.S. soybean 07 contract rose 1.51% week - on - week, and the main U.S. soybean meal 07 contract fell 0.10% week - on - week [1]. - **Domestic Futures**: In the week of June 6, 2025, the main domestic soybean meal m2509 contract rose 1.42% week - on - week, and the main soybean No. 1 a2507 contract rose 0.78% week - on - week [2].