Today (May. 7th), the market for oilseeds and oils in China is shown as follows:
Oilseeds:
Imported soybean: Imported soybean price stays stable today, among which non-GM old soybean is unchanged at 4,150 yuan/tonne from yesterday, and non-GM Russian soybean is unchanged at 3,400 yuan/tonne from yesterday and the GM is not offered. Brazilian soy industry group Abiove raised its estimate for the country's 2018/19 soybean crop to 117.6 million tonnes. The bumper crop harvest in South America and ample global supply still still curbs soybean market. For U.S.-China trade talks, there are uncertainties from renewed US-China trade tensions because President Trump said that he believed talks were progressing too slowly and warned he would consider increasing tariffs on a $200 billion of Chinese goods to 25% from the current 10% on Friday. But Chinese Foreign Ministry said the Chinese team was set to come to Washington. And U.S. official also said U.S.-China trade talks would be held on this Thursday and Friday. The fluctuations of short-term imported soybean prices in distribution market are likely limited.
Cottonseed: Cottonseed prices today are stable with a rise of 0.02-0.04 yuan/kg due to the tight supply when the cottonseed quantity is decreasing and some cottonseeds are sold to livestock farms. However, the upward potential is likely curbed by low purchase activity of oil mills due to the high price of cottonseed and poor crush margin, some mills mainly using its own stock. Short-term cottonseed is likely to go strong. Buyers can make proper replenishment upon low prices, yet don't chase high bids too far.
Oils:
Summary: U.S. soybean hit its near eight-month lowest overnight, as U.S. President tweeted to raise tariffs from this Friday, but oil futures reverse declines to rebound on the Dalian Commodity Exchange due to this bullish news. In spot markets, soybean oil and palm oil go up by 20-50 yuan/tonne with some purchases at low prices. South American soybean premiums responded to rebound by 15-20 cents yesterday, but due to its still high net crush margins of 290-320 yuan/tonnes, Chinese oil mills bought three cargoes for June and July shipments. Soybean inventory increased by 14% weekly and 7% annually to 4.26 mln tonnes in coastal areas, and its crush will probably rise back to above 1.80 mln tonnes next week. In this case, soybean oil inventory is also expected to go above 1.40 mln tonnes. Meanwhile, palm oil has also seen seasonal output growth and huge stockpiles in Malaysia. Besides, China’s Ministry of Foreign Affairs has confirmed a schedule for trade talks in Washington on this Thursday and Friday. Therefore, oil market will have limited space to rebound. Due to growing uncertainties in trade talks, short-term oil market will likely follow futures to fluctuate to rebound moderately, but may also post frequent fluctuations. Buyers can make moderate replenishment on the dips while avoiding buying those with huge rises, and participants can focus on trade talks this week.
Soybean oil: GB Grade I soybean oil is mainly priced at 5,240-5,350 yuan/tonne in domestic coastal areas, a rise of 30-50 yuan/tonne. (Tianjin 5,240-5,250, Rizhao 5,290, Zhangjiagang 5,350 and Guangdong 5,290).
Palm oil: 24-degree palm oil is mainly priced at 4,260-4,330 yuan/tonne in coastal areas, broadly up 20 yuan/tonne. (Tianjin 4,320, up 20; Rizhao 4,330, up 20; Zhangjiagang 4,320, up 20, Guangzhou , 4,260-4,270 and Xiamen not offered).
Imported rapeseed oil: Imported rapeseed oil goes up today, of which it is 6,980-7,200 yuan/tonne in coastal areas, up by 70-150 yuan/tonne. (Fujian and Guangdong not offered, and Guangxi 7,200, up 150). A swift change in trade talks is indicated in a tweet by U.S. President Danld Trump, and due to ongoing tensions between Beijing and Ottawa, rapeseed cargoes have all been canceled. Therefore, short-term rapeseed oil price will remain high due to a tight supply outlook. However, domestic oil supply is ample, and rapeseed oil demand has already been affected by its enlarging spread with soybean oil and palm oil. Moreover, soybean imports will be huge from May to August, and palm oil imports are also large in recent two months. Due to the upcoming extradition hearing against Meng Wanzhou and renewed uncertainties in US-China trade talks, rapeseed oil market will go much more volatile recently, but buyers are suggested to maintain light stockpiles due to policy risks.
Cottonseed oil: Cottonseed oil today stays stable with some fluctuations of 20-30 yuan/tonne when the poor crush margin results in low operation rates and output; the U.S. president's tariff treats and the renewed US-China trade tensions are good for market in China. Today oils on DCE rebound after earlier decline and soybean oil and palm oil spots are up 20-50 yuan/tonne. However, the limited cottonseed oil volume for blending and thin turnover curbs cottonseed oil upward potential. Short-term cottonseed oil is likely to stay stable with some fluctuation at a narrow range. Buyers are suggested to take a hand-to-mouth buying strategy, and pay attention to the trade talks this Friday.
(USD $1=CNY 6.77)
