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Daily Review on Markets for Oilseeds and Oils in China

2019-07-22 www.cofeed.com
      Today (Jul. 22nd), the market for oilseeds and oils in China is shown as follows:
 
      Oilseeds:

      Imported soybean: Imported soybean price is steady today, among which Brazilian selected soybean for food is unchanged from last Friday at 3,850 yuan/tonne, and Russian soybean is at 4,150 yuan/tonne, unchanged from last Friday. The insufficient supply of imported and distributed soybean in Tianjin port is supportive of prices. However, China will resume the purchase of U.S. agricultural produce and the US soybean imports later likely increase, as some Chinese enterprises have inquired with U.S. exporters about the purchase of agricultural produce and applied for the lifting of tariffs, according to Xinhua. Moreover, it's off-season period for soybean demand. These are all negative to the market. The market is mixed and short-term prices likely maintain stable.

      Cottonseed: Cottonseed prices today are partially up 0.01-0.06 yuan/kg with most purchase activities suspending, due to the declining supply of cottonseed, and a certain period before the marketing of new cottonseed. However, the upward potential is curbed because the cottonseed trading is not much as oil mills are reluctant to purchase and some mills mainly use its own stock due to poor crush margin. Short-term price is likely to fluctuate in narrow range and buyers can stay on the sideline or take a hand-to-mouth purchasing strategy.

      Oils: 

      Summary: The market said that five crush firms could enjoy some 3.0 mln tonnes of soybean import free of the additional tariff and Xinhua reported that Chinese businesses had made inquiries with U.S. exporters to buy crops and agricultural products and applied for the lifting of tariffs. Therefore, U.S. soybean futures posted sharp gains last Friday on improved China-U.S. relationship, but meal futures pare gains after lower opens on the Dalian Commodity Exchange today due to this bearish news on the domestic market and this supports oil futures to fluctuate to edge higher. In the spot markets, soybean oil and palm oil partially increase by 10-40 yuan/tonne in tepid trading. Oil mills tend to prop up prices as soybean crush fell to 1.50 mln tonnes due to swelling soybean meal inventories and machine maintenance. Nevertheless, soybean oil inventory has increased by 1.2% to 1.46 mln tonnes for its slow delivery under dismal demand, and palm oil inventory has also grown by 2.2% to 660,000 tonnes. In the hybrid of a bull and a bear, short-term oil market is predicted to extend its narrow and frequent fluctuations on the back of futures, and to fluctuate to edge up on the start of the stockpile for small packing oil and the weather speculation on U.S. soybeans.

      Soybean oil: GB Grade I soybean oil is mainly priced at 5,230-5,380 yuan/tonne in domestic coastal areas, some up by 20-40 yuan/tonne. (Tianjin 5,250-5,260, Rizhao 5,300, Zhangjiagang 5,400, and Guangzhou 5,340). 

      Palm oil: 24-degree palm oil is mainly priced at 4,230-4,320 yuan/tonne in coastal areas, up by 10-50 yuan/tonne. (Tianjin 4,290-4,300, up 10; Rizhao 4,310-4,320, up 50; Zhangjiagang 4,230, up 30; Guangzhou 4,230, up 30; and Xiamen not offered).

      Imported rapeseed oil: Imported rapeseed oil steadily steps down today, of which it settles down partially by 10 yuan at 6,880-7,000 yuan/tonne in coastal areas. (Fujian not offered; Guangdong 6,880, stable; and Guangxi 7,000, stable). The demand for rapeseed oil is influenced by its enlarged price spread with soybean oil and palm oil. Moreover, soybean oil inventory remains large due to huge soybean import, and palm oil inventory is also increasing. Hence, rapeseed oil market is weighed down. But rapeseed supply may get tightened due to unsettled issues between China and Canada, rapeseed oil inventory fell by 5% to 480,000 tonnes last week, and the stockpiles for packing oil is expected to start late this month; thus, rapeseed oil will receive some support from this aspect. Overall, short-term market may fluctuate narrowly at a high level. 

      Cottonseed oil: Cottonseed oil today stays stable. And some support comes from the following situations that the operation rates and output are low; cottonseed price is strong; a busy season for restocking of small-packing oils is coming; and today oils on DCE have a uptick with fluctuations, and spot soybean oil and palm oil partially go up 10-40 yuan/tonne. However, the market is negative on the limited consumption for cottonseed oil as blending oils, and high fundamental pressure in staple oil market. Short-term cottonseed oil is likely to fluctuate. Buyers are suggested to take a hand-to-mouth buying strategy.

        (USD $1=CNY 6.88)