Today (Dec. 3rd), the market for oilseeds and oils in China is shown as follows:
Oilseeds:
Imported soybean: Imported soybean price keeps steady today, among which Non-GM Canadian soybean is not offered for out of stock, Russian soybean is 3,400 yuan/tonne, and GM soybean is not offered. What’s more even concerning is whether there will be any official news that the 28% of soybean import tariffs will be restored to 3% now that China has agreed to purchase US agricultural products. If the tariff is restored, distribution market of imported soybean will probably slump; but if not, the market will edge up under tight supply. In such an uncertain case, distribution market of imported soybean will largely stay stable to fluctuate narrowly in the short term.
Cottonseed: Domestic oil and meal markets fall bearish due to a temporary easing state of trade war after the meeting between the US and Chinese presidents. Oil mills remain cautious in purchasing and some have even stopped to purchase during rough market. Therefore, cottonseed price falls by 0.01-0.04 yuan/kg under bad performance. But the overall price decline is restricted under a small volume from Xinjiang under traffic tensions and expensive freights and ginning plants’ sentiment in hoarding to support the price. On the whole, short-term cottonseed market will probably fluctuate narrowly to go weak, and buyers can take hand-to-mouth buying.
Oils:
Summary: The US and China have reached consensus, where the former has agreed to suspend the schedule of increasing tariffs on January 1st, 2019, and both sides will endeavor to have the transaction completed within the next three months. Such an easing trade state, especially with a US declaration that China has agreed to start purchasing agricultural product from their farmers immediately, is bearish to domestic market. On the Dalian Commodity Exchange (DCE), soybean oil has seen limited losses since its bearish stance has been offset partly by losses in the last several sessions, and palm oil even posts modest rises. And in spots market, domestic soybean oil shows fluctuations and palm oil increases, both trading a little. Soybean oil inventory has declined slightly to 1.78 Mln tonnes as some oil mills have restricted their production for swelling soybean meal inventories. In addition, there may be a round of tit-for-tat tariff announcement if two sides fail to reach a deal within 3 months. What’s more even concerning is whether there will be any official news that the 28% of soybean import tariffs will be revised to the original 3% now that China has agreed to purchase US agricultural products. If the tariff is revised, oil market will run under pressure; if not, it may rally temperately under tight raw material supply and the start of small packing-oil stockpiles. Buyers can take hand-to-mouth buying provisionally on account of uncertainties in the trade war.
Soybean oil: GB Grade I soybean oil is mainly priced at 5280-5,430 yuan/tonne in domestic coastal areas, fluctuating by 10-20 yuan/tonne partially. (Tianjin 5,330-5,340, Rizhao 5,420, Zhangjiagang 5,420, and Guangzhou 5,280).
Palm oil: 24-degree palm oil is mainly priced at 4,200-4,370 yuan/tonne in coastal areas, mostly up 10-20 yuan/tonne. (Tianjin 4,350-4,360, up 20; Rizhao 4,370; Zhangjiagang 4,310, up 30; Guangzhou 4,200, up 10; Xiamen not offered).
Imported rapeseed oil: The price for imported rapeseed oil stays stable to edge down today, of which t is 6,140-6,370 yuan/tonne in coastal areas, down by 10-20 yuan/tonne partially. (Fujian not offered; Guangdong 6,270, down 20; Guangxi 6,180, down 10). Rapeseed oil inventory has dropped by 4% to 598,000 tonnes in costal areas this week, for operation rate has been sliding under swelling inventories of soybean oil and rapeseed oil. But the oversupply pattern is yet to be reversed since overall inventories remain high despite the decline of both rapeseed oil and soybean oil. Therefore, short-term rapeseed market may show weak fluctuations. Market participants need to keep monitoring whether soybean import tariff will be cut down since China has agreed to purchase US agricultural product immediately. If it is cut, oil market will fall bearish. Buyers can take hand-to-mouth buying provisionally on account of uncertainties in the trade war.
Cottonseed oil: Soybean posts large gains on Globex under an easing trade state after the meeting between US and Chinese presidents. In addition, the trade war is yet to finish and the two countries will continue to carry out negotiations in the next three months. Soybean oil spots show resilience to fluctuate by 10-20 yuan/tonne, and cottonseed oil falls by 50-100 yuan/tonne as its blend demand is limited under the ongoing oversupply pattern of bulk oils. The decline now is limited by its small output and low prices, as well as uncertainties in the trade dispute. Therefore, cottonseed oil may go weak to fluctuate in the short term. By the way, investors need to keep monitoring whether the 28% of soybean import tariff will be revised to the original 3% now that US declared China has agreed to purchase US agricultural products. If it is revised, oil market will fall bearish.
(USD $1=CNY 6.90)
