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Daily Review on Markets for Oilseeds and Oils in China

2018-11-01 www.cofeed.com
      Today (Nov. 1st), the market for oilseeds and oils in China is shown as follows:
 
   Oilseeds:
 
  Imported soybean: Imported soybean quotation remains steady today, of which non-GM Canadian soybean is not offered for out of stock and Russian soybean is unchanged from yesterday at 3,650 yuan/tonne. And GM soybean is not offered. Amid the ongoing US-China trade frictions, according to the latest statistics by Cofeed, imported soybean at port is projected at 6.399 Mln tonnes boarded 102 ships to domestic ports in October, and probably only 17.1 Mln for November to January due to the cancellation of some ships for US soybean. The volume is far lower than that of the same period last year, of which it is 8.6842 Mln tonnes, 9.55 Mln tonnes and 8.48 Mln tonnes for November, December and January, respectively. Importers have a strong will to support the price as market participants show concerns over the soybean supply on later market. But imported soybean market is dented by its weak price performance due to its narrow price spread with domestic soybean. In general, as trade conflicts are yet to ease, imported soybean distribution markets may largely remain stable despite fluctuations on worries of forward supply.  
 
  Cottonseed: Cottonseed oil and meal continue to perform weakly, and oil mills mostly take the hand-to-mount buying in face of poor crush margins and high-priced new cottonseed, so cottonseed price declines by 0.02-0.06 yuan/kg today. But the trade war is yet to finish and there is just a handful of cottonseed from Xinjiang under traffic tensions, which contribute to prop up the mainland cottonseed market and limit is declines. But due to the callbacks of its oil and meal, cottonseed may adjust to go weak in the short term, and buyers can just wait.    
 
   Oils: 
 
  Summary: US soybean presented a technical rebound last night. But today oils on the Dalian Commodity Exchange fluctuate to edge down, and spots mostly remain steady to see some fluctuations and trade low. Operation rate climbs high under handsome crush profits, pushing soybean oil stock to reach 1.86 Mln tonnes. And in South America, some refineries, due to dismal crush margins, resold their soybean to China, with 11 ships last week and 6 ships this week so far; besides, some countries have been signing soybean contracts for December, among which Brazilian soybean is planted at an unprecedented speed, making it possible to be loaded as early as late December, not to mention the 3 Mln tonnes in January. In this context, forward supply gap will be far smaller than expected. And such bearish fundamentals pull back oil market to suffer continuous callbacks in the short run. But soybean meal has also slumped on the new standards lowering down its consumption, after which oil futures post resilience upon the completion of the “buying meals and selling oils” arbitrage. In the meantime, as packing oil stockpiles in the run up to the Chinese Spring Festival will gradually start in December, oil mills still hold willingness to support the price; hence, there is little room for oil market to suffer further slips. But price adjustments are yet to finish, so buyers can just take hand-to-mouth basis.      
  
  Soybean oil: GB Grade I soybean oil is mainly priced at 5,530-5,600 yuan/tonne in domestic coastal areas, some fluctuating by 10-20 yuan/tonne (Tianjin 5,540-5,550, Rizhao 5,530, Zhangjiagang 5,600, Guangzhou 5,530-5,540).  
   
  Palm oil: 24-degree palm oil is mainly priced at 4590-4710 yuan/tonne in coastal areas, some falling by 20-30 yuan/tonne (Tianjin 4,700-4,710, unchanged; Rizhao not offered; Zhangjiagang 4,680, down 20; Guangzhou 4,590-4,610, down 30; Xiamen not offered).  
     
  Imported rapeseed oil: The price stays stable to fall slightly, of which it is 6,240-6,410 yuan/tonne in coastal areas (Fujian 6,370; Guangdong 6,400, down 10; Guangxi 6,350, stable). Both rapeseed oil and soybean oil hold large inventories under high operation rate. Besides, there is a potential meeting between Presidents Xi Jinping and Donald Trump. Therefore, rapeseed oil market turns volatile and may fluctuate to adjust in the near run. But the crush volume will reduce as China has released new standards to lower down meal consumption in animal feed, while stockpiles for small packing oil will start in December, so the market will hardly suffer further declines. And once trade frictions escalate again, rapeseed oil market is expected to edge up. Buyers can wait for steady falls to make proper replenishment on the dips.        
 
  Cottonseed oil: Soybean oil spots fluctuate by 10-20 yuan/tonne. And bulk oils are now of large inventories, while cottonseed oil end demand is limited amid an increased amount of new cottonseed oil on the market, so cottonseed oil slips by 40-100 yuan/tonne and trades low. But trade war is hard to end and oil mills are still supporting the price for their small stocks, both of which limit the decline in cottonseed oil. On the whole, cottonseed oil market may continue to adjust upon fluctuations in the short term, so buyers can just wait.  
 
(USD $1=CNY 6.97)